Legacy IRA Act

The American Heart Association (AHA) led a coalition of nearly 60 national charitable partners to advocate in support of the Legacy IRA Act. AHA is very proud that a modified version of the Legacy IRA Act was passed into law at the end of 2022. This new law enhances and expands a form of giving from seniors to charities using their retirement assets. It is expected to raise hundreds of millions of dollars for nonprofits each year.

Summary of Change for Older Donors

Enacted in 2006, the IRA charitable rollover (also known as QCD) allows taxpayers age 70½ or older to make charitable gifts of up to $100,000 per year directly from their IRAs to eligible charities, including the American Heart Association as tax-free withdrawals that count towards required minimum distribution (RMD).

The Legacy IRA Act is an enhancement and expansion of the IRA Charitable Rollover. The change in law will incentivize seniors to make donations from traditional IRAs. The change allows older donors starting at 70 ½ to rollover IRAs to establish life-income plans, such as charitable gift annuities (CGAs), with a maximum aggregate gift amount of $50,000 in one calendar year. It can only be used in a single calendar year. If the donor does not use the full $50,000 to create CGAs, the unused portion does not carry forward.

With many Americans unable to afford to give away their retirement income during their lifetimes, this gives older donors one more critical way to support the philanthropic sector in a way that works for them. The QCD withdrawal to create a CGA has several benefits for older donors. It counts towards RMD; for non-itemizers, it offers a comparable benefit to a charitable deduction; it turns variable income from the IRA into fixed income; and it can be combined with outright QCD for greater charitable impact. After the donor passes away, the remaining amount is used by the charity for their mission.

What does the change in law do?

Enhance the IRA Charitable Rollover: The law permanently indexes the existing IRA Charitable Rollover amount (currently at $100,000) starting in 2024. This will be the first increase in nearly 20 years.

Expand the IRA Charitable Rollover: The change in law allows seniors starting at 70½ to contribute up to $50,000 from their traditional IRA account to charities to fund a charitable gift annuity, a charitable remainder annuity trust, or a charitable remainder unitrust. The $50,000 cap can only be used in one calendar year, but within this one-year period seniors can make gifts to multiple charities within a total cap of $50,000. The life-income provision took effect January 1, 2023 and will be indexed is permanent.

Why AHA Led This Effort

The IRA charitable rollover has raised millions for charities and their missions the last few years. After the IRA charitable rollover was made permanent in 2015, the AHA saw a significant increase in gifts from traditional IRA assets.

Data from FreeWill's online platform shows the value of the current Charitable IRA Rollover for the charitable sector as there was a 390% increase in total number of gifts from 2019 to 2021. The Legacy IRA Act would further expand this giving incentive to more middle-income seniors. Many nonprofits are reliant on giving from seniors. The average age of a U.S. donor is 64 and Baby Boomers account for over 40% of all current charitable donations,.

This incentive for more middle-income seniors to give to charities from IRA accounts is timely as currently ten thousand Baby Boomers turn 70 every day. This makes 70 to 80-year-olds the fastest growing age bracket in the US. At the AHA, well over half of our loyal, annual donors are 70 or older.

By incentivizing charitable giving, the Legacy IRA Act will allow the AHA to fulfill our mission to be a relentless force for a world of longer, healthier lives. If you are interested in learning more about how to make an IRA charitable rollover gift, please go to our Charitable Contribution page.

If you have any questions about the Legacy IRA Act, please contact Emily Horowitz, Government Relations Manager, at [email protected]. If you have other advocacy questions, please contact Lake Majestic, Associate Government Relations Manager, at [email protected].

Resources

• Text of the Legacy IRA Act (P.L. 117-328, SEC. 307. ONE-TIME ELECTION FOR QUALIFIED CHARITABLE DISTRIBUTION TO SPLIT-INTEREST ENTITY; INCREASE IN QUALIFIED CHARITABLE DISTRIBUTION LIMITATION)
• Summary and FAQs
• Press Release