In February, the IRS discount rate was 1.6%. In December, it is up to 5.2%, more than triple what it was just ten months ago. This dramatic change coincides with a similar escalation of interest rates in the U.S. generally, as well as increased nervousness over whether the rapid rise in interest rates might soon tip the economy into a recession.

Don’t freak out over the swift shift in economic conditions. View it as an opportunity. This is a great time to renew contact with your donors and educate them about gift plans they might want to consider in this new economic reality.

In this article, Bill Laskin, PG Calc's Vice President of Product Management, explores the tax implications of the SECURE Act for IRAs and how that could impact gift planning.

IRS statistics indicate traditional IRAs held nearly $8 trillion in assets at the end of 2018, the latest year for which data is available. That is a huge potential source of charitable gifts. Any change that might increase the likelihood of gifts of IRA assets is enough to get gift planners excited, and rightly so.

The SECURE Act that was signed into law at the end of 2019 contained several provisions that drew the attention of gift planners. One provision of the Act was elimination of the so-called “stretch” IRA for most non-spouses. 

The SECURE Act significantly limited who can stretch payments from an inherited IRA over their life expectancy. Gift planners recognized that for charitably minded IRA owners, the elimination of the “stretch” IRA created an additional incentive to designate what is left in their IRA to one or more charities and use other funds to benefit their heirs.