New IRA Law Does Not Affect Gifts

December 23, 2019

December 23, 2019

New IRA Law Does Not Affect Gifts


As of Jan. 1, 2020, Individual Retirement Accounts (IRA) will have a number of new provisions pertaining to various retirement programs, but not gifts.

  • IRAs will now be subject to required minimum distributions (RMD) when the account owner reaches the age of 72. Currently the age is 70 ½.

  • An IRA owner will still be allowed to arrange a qualified charitable distribution (QCD) on a voluntary basis. By qualified, the IRS means the charitable recipient is a registered 501 (c)(3); your Air Force Association meets this test.

  • Although the RMD age is rising, QCDs may be made when the IRA owner reaches 70 ½ years of age.

  • The QCD can consist of a portion or all of the RMD, and/or an additional amount beyond the RMD, and remains as excluded from taxable income in the year it is transferred to charity.

  • The RMD is an IRS actuarially determined amount.

  • A QCD is account owner determined and has a cap of $100,000 annually.

  • An additional change concerns IRAs that are transferred to an heir upon the owner’s passing. The new law now specifies the heir’s income must be taken within a 10-year timeframe, except when the beneficiary is the owner’s spouse. In the past, income taxes were calculated on the life expectancy of the new owner, thus a lower tax amount. For this reason, advisors recommend designating a charitable recipient for the IRA‘s ownership because of tax-exempt status, and bequeathing other assets to persons.

Therefore, donors who desire to support their Air Force Association through a QCD remain able to do so when they reach the age of 70 ½, and we are grateful for this consideration.

For additional details, contact AFA’s Director of Development, Wesley Sherman, 703-247-5831,, to get more information.