Charitable Donations Can Remedy Your RMD Tax Burden

If you’re over age 72, each year you must take required minimum distributions (RMDs) from your retirement accounts. Failing to do so results in a hefty penalty—50% of the amount you should have withdrawn. But what if you don’t need the income? What if taking the RMD will increase your tax burden or Medicare insurance premiums?

Enter: the Qualified Charitable Distribution (QCD).

To avoid receiving your RMD as income, you can transfer up to $100,000 from your IRA to a qualified charity. This satisfies your RMD and prevents any unwanted additional income that would increase your tax burden. Importantly, a donation you make from income you’ve already received doesn’t qualify as a QCD.

If you have any questions about RMDs or QCDs, or need assistance with year-end financial and tax strategy, don’t hesitate to contact the office.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.