Marketing Package Now Available

IRA Rollover to Gift Annuity Marketing Package

Crescendo has released a new marketing package to help you reach your donors about the new IRA legacy giving opportunity included in the Consolidated Appropriations Act of 2023. The package focuses on how your donors can make a one-time IRA charitable rollover of up to $53,000 to fund a charitable gift annuity.

This package includes a brochure, eblast, brief, extended postcard, insert and postcard. It is available in CresManager and CresPrint. Contact us for more information.

Secure Act 2.0 Benefits

The Secure Act 2.0 was included in The Consolidated Appropriations Act of 2023 (H.R. 2617). It includes many changes that will enhance and facilitate retirement benefits.

Since passage of the original Secure Act in 2019, both House and Senate Members have been working on further changes to encourage saving for retirement. Secure Act 2.0 will increase the required minimum distribution age, allow a larger catch-up contribution limit, facilitate rolling some Section 529 plans into Roth IRAs and generally expand access to retirement plans for moderate and lower-income employees.

IRA to Charitable Gift Annuity Rollover

Section 307 of the Secure 2.0 Act allows a one-time rollover of $53,000 from an IRA to a life income plan. This provision amends Internal Revenue Code Section 408(d)(8) and creates a limited one-time IRA rollover into certain qualified life income plans. This qualified charitable distribution (QCD) of up to $53,000 is permitted on or after January 1, 2023.

The $53,000 IRA distribution may be to a non-assignable charitable remainder annuity trust (CRAT), standard payout charitable remainder unitrust (CRUT) or immediate charitable gift annuity (CGA). A net income plus makeup unitrust or a deferred payment gift annuity are not qualified charitable entities. The CRUT or CRAT must be funded with only QCDs. There can be no additions of other assets.

The distribution must be to a charitable remainder trust with the remainder interest distributed to an exempt nonprofit. For a charitable gift annuity, it must have a 5% or higher payout rate and be qualified under Section 501(m)(5)(B). Some two life gift annuities with the IRA owner over age 70½ and a spouse under age 62 may need to increase the payout from the ACGA recommended rate to 5% in order to qualify. If charities have filed the ACGA rates or a fixed rate schedule in New York, California or other regulated states, this selective increase in payout rate may not be permitted by the state insurance commissioner.

The CGA, CRUT or CRAT payouts must either benefit the IRA owner or the IRA owner and spouse. All payments from a charitable remainder trust will be ordinary income. Because there is no investment in the contract under Section 72(c), all payouts from a gift annuity will also be ordinary income.

The bill permits an inflation adjustment starting in 2024. The $105,000 limit for current IRA rollover gifts (QCDs) and the $53,000 one-time QCD limit for gifts to a life income plan will be adjusted for inflation. The new numbers will be rounded to the nearest thousand dollars. The outright QCD must be a transfer from the IRA custodian to a qualified nonprofit and may not be to a donor advised fund or supporting organization.

With many Baby Boomers reaching their mid-70s in the coming decade, charitable gift annuities are entering a golden age. With greatly increased numbers of potential gift annuitants, the coming decades present the possibility of steady growth in the size of the primary gift annuity market. Donors appreciate the fixed payments and generous fixed rates. Although the opportunity to fund a CGA with a QCD is a one-time provision, donors will enjoy the fixed lifetime payments at favorable fixed rates. First-time IRA rollover to CGA donors may become repeat CGA donors using other funding sources.

The Secure Act 2.0 includes many changes designed to encourage retirement savings. These changes may also have a positive impact for charities by expanding charitable giving vehicles for IRA owners.

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