On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law. The provisions of the law took effect on January 1, 2020.
For individuals who turn 70½ after December 31, 2019, the Required Minimum Distribution (RMD) age of 70½ is increased to age 72. Those who reached age 70½ on or before December 31, 2019 must start their RMDs. But while the age to begin RMDs has increased to 72, the minimum age to begin making qualified charitable distributions (QCD)* remains at 70½ for everyone.
IRA owners over age 70½ may continue to make QCDs (also known as charitable rollovers) to qualifying charities like SUNY Potsdam. Individual owners may transfer up to $100,000 to charities each year. These transfers may fulfill part or all of an annual RMD.† To be eligible, QCDs must be distributed directly to charity. These transfers are not taken into account in determining the deduction eligibility of other charitable contributions. Qualified charitable distributions may fulfill charitable pledges.
The SECURE ACT also changes the way IRAs are inherited. Under past law, inherited IRAs could be paid out, “stretched,” over the remaining lifetime of the beneficiary. Under the SECURE Act, IRAs passing to non-spouse beneficiaries will no longer be distributed over life expectancy. Instead, IRAs and other qualified plans of decedents must generally be paid out over a maximum term of ten years. This prevents an IRA owner from planning long-term income for a child or other family members. One possible charitable solution to this is a testamentary Charitable Remainder Unitrust (CRUT).
When the IRA owner passes away, a testamentary charitable remainder unitrust may be funded with IRA assets. In the CRUT, the full IRA proceeds grow tax-free and earn taxable income for the CRUT recipients for life (or term of years). When payments end, any remaining assets pass to charity.
* QCD gifts are eligible to count in SUNY Potsdam fundraising campaigns, in anniversary reunion fundraising and towards annual President’s Club recognition. View sample letter requesting a QCD from your IRA administrator.
Most QCDs go to SUNY Potsdam as a check from the IRA administrator. Oftentimes these checks do not identify the donor or the fact that it is a QCD. It is helpful if you contact SUNY Potsdam when you authorize your gift. View sample letter to send to Potsdam.
† Special rules apply if you put money into your IRA after age 70½, take a tax deduction for it, and then make a QCD. Consult your financial advisor.
Contact us for help with questions:
Jason Ladouceur, Senior Director of College Advancement
Potsdam College Foundation
44 Pierrepont Ave., Potsdam, NY 13676
- Learn more about the SECURE Act and IRA beneficiaries
- Learn more about Qualified Charitable Distributions
- Learn more about Charitable Remainder Unitrusts
The Raymond Legacy Society celebrates those who have made an estate gift arrangement to support the College, as well as those who have established a permanent endowed fund. The Society also provides educational material on giving to assist alumni and friends in achieving their philanthropic goals. For more information, visit potsdam.edu/legacy.
This information does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your attorney, tax advisor and SUNY Potsdam before making or planning your gift. (rev. 01/20)