What You Need to Know About This Year’s New Financial Planning Laws

A new year has brought more than just resolutions. It’s brought new laws and other changes that may affect your giving decisions. And with any economic change, you may be looking at your finances and wondering how you will be impacted.

The new laws include retirement changes, known collectively as “Secure 2.0,” that may affect your saving and your giving. They may even make it easier for you to make a difference at organizations you care about.

Some important things Secure 2.0 does that involve charitable giving:

  1. Increases the required minimum distribution (RMD) age

    Secure 2.0 increases the age retirees must begin taking taxable withdrawals to 73 in 2023 and 75 by 2033, up from the previous 72. It does not, however, increase the age an IRA owner can make a qualified charitable distribution. That age remains at 70½.

    How does this affect me?
    Simply put, the extension of the RMD age gives you more time to save. You will enjoy additional tax-free growth. It also can be significant if you do not want to begin withdrawing retirement funds during an unsettled economic climate, giving you more time for your stock portfolio to recover.

  2. Adjusts for inflation the $100,000 annual limit on direct gifts to qualified charities from your IRA

    Are you 70½ or older? If so, you may know about a popular gift option that allows you to make a gift directly from your IRA to a qualified charity without paying income taxes on the distribution. Historically, the amount you could give was capped at $100,000 per year. This figure will now be adjusted annually for inflation beginning in 2024.

    How does this affect me?
    This allows you to not only increase your giving but also ensure your giving keeps pace with inflation. And you can make an impact—and see that impact—now rather than after your lifetime.

  3. Allows for a distribution from your IRA to fund a life-income gift

    If you are 70½ or older, you can make a one-time election for a qualified charitable distribution of up to $50,000 (without being taxed) from your IRA to fund a life-income gift such as a charitable gift annuity, charitable remainder unitrust or charitable remainder annuity trust.

    How does this affect me?
    These types of life-income gifts allow you to make a gift to a qualified charitable organization and receive lifetime payments to boost your retirement income, or provide a lifetime payment for you or your spouse.

Let’s Talk!

We can help answer any additional questions you might have about how the new retirement laws affect your charitable giving. Contact Broderick Perlman at 516.812.7218 or giftplanning@animalleague.org to have a conversation about your legacy.

A charitable bequest is one or two sentences in your will or living trust that leave to North Shore Animal League America a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

I give to North Shore Animal League America, Inc., Federal I.D. No. 11-1666852, 16 Lewyt Street, Port Washington, NY 11050, (the sum of $______) (all or ___ % of the residue of my estate/trust), to be used for its general purposes.

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to North Shore Animal League America or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to North Shore Animal League America as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to North Shore Animal League America as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and North Shore Animal League America where you agree to make a gift to North Shore Animal League America and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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