The SECURE Act that was passed in December 2019 has gone into effect and the asymmetry of some of its changes has created a new planning opportunity for IRA owners who have an interest in giving to charities. Prior to this new legislation, IRS regulations mandated that IRA account owners (as well as employer sponsored plans like 401k’s and 403b’s) became subject to the Required Minimum Distribution rules upon attaining the age of 70 ½. The new legislation increased this age to 72. What did not change, however were the rules for Qualified Charitable Distributions which can still be initiated at age 70 ½.
As we approach the traditional Federal Income Tax filing deadline, it’s instructive to examine income tax demographics as reported by the Internal Revenue Service (IRS). This is especially relevant in the context of the spending plans being proposed (free college, student loan forgiveness, Medicare-for-all, etc.) during the Democratic presidential primary debates. In early March, the IRS released a thorough analysis of taxpayers’ incomes and payments for tax year 2018. Knowledge of these demographics can help us dispel some of the myths and misunderstandings associated with commonly purported tax benefits.