70 ½ vs. 73?

We’ve been hearing some confusion from a lot of clients around the age split of 70 ½ vs. 73 for gifting from an IRA. Which is the correct age? What are the rules around each age?

When it comes to marketing this great gifting strategy, the problem is both are right.

Historically, the age at which you needed to start taking Required Minimum Distributions (RMD) and the ability to make a gift from your IRA were the same – 70 ½.

As of this past year, the rules have changed somewhat.

Directly from the IRS (which is where we recommend getting your information from): “You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022).”

If you turned 72 before 12/31/2022 – you needed to have already started taking your RMD. If you’re younger than that – you don’t start taking your RMD until you’re 73.

BUT – again according to the IRS: “Each year, an IRA owner age 70 ½ or over can exclude from gross income up to $100,000 of these Qualified Charitable Distributions (QCDs). For a married couple, if both spouses are age 70 ½ or over, and both have IRAs, each spouse can exclude up to $100,000 for a total of up to $200,000 per year.”

The downside, when making a QCD, is that there is no charitable deduction for the gift. If a donor wants a tax deduction, they need to show the IRA distribution as income.

The short of it:

A donor can make gifts up to $100k/$200k per year starting at 70 ½ , but they don’t get the double benefit of counting against their RMD until they’re 73. For many donors, this is still a great option as they can still use their IRA like any other (appreciated) asset and make gifts strategically.

In the end:

This makes marketing donor stories of IRA QCDs at any age critical for you and your organization so your donors understand that:

Other donors like me, make gifts like this.

Marketing is meant to inspire donors and invite them to make an impact.

To learn more about how to market IRAs to your donors, please schedule a call with one our associates today!
Stay Informed!

Did you find this information interesting? We send new content like this every week!

Fill out the below form to receive the latest in Planned Giving news, training, and general wisdom right to your inbox!

Wisdom Wednesday – Are you 85?

Wisdom Wednesday – Are you 85?

Are you 85? I didn't think so ...We've talked about the mindset of our most senior donors in the past. And we'll most likely talk about it forever. Why? None of us know what it's like to be 85 - unless we're 85.We've all been 16 before. Most of us have even recovered...

read more
Generational Marketing – Traditionalists

Generational Marketing – Traditionalists

Generational Marketing - TraditionalistsTraditionalists include those aged 77+ and will be a key group when it comes to your planned giving outreach.Learning how to communicate with this portion of the population is important for your success. Discovering the nuances...

read more

Tech Tuesday – IRS Discount Rate

IRS Discount Rate  With the signing of the Consolidated Appropriations Act of 2023 and the provision referred to as Secure 2.0, there is newfound interest around Charitable Gift Annuities* (CGAs). Because of this we’re all becoming reacquainted with the IRS...

read more
Wisdom Wednesday – Planning for 2023

Wisdom Wednesday – Planning for 2023

Planning for 2023 New year, new view on planned giving fundraising Look at it from your donor’s point of view, understand what they need and want, not what your organization needs or wants. The new year is a great time to pause, reflect, and reset. Most of us think...

read more