Leaving a Legacy Through Your RMD
If these statements resonate with you, chances are you have already done a lot for your community and your church. There are many fulfilling ways to give back, but the most impactful ways are also simple and efficient for the donor. One of the most impactful and simple methods is to contribute your annual required minimum distribution (RMD) from your IRA. This is an easy, tax-efficient way to ensure you leave the lasting legacy you hope for.If you are working with a financial professional, they can walk you through this simple and effective process known as taking a Qualified Charitable Deduction (QCD). If you are age 70 ½ or older, you are eligible to take advantage of this great opportunity to help ensure your legacy is felt for generations.
“You’ve built an estate that you and your family are proud of. You already contribute philanthropically to causes that you care about deeply. Still, you wonder if your legacy is all it could be.”
The process is straightforward. Your advisor can instruct your Individual Retirement Account (IRA) trustee to make a distribution directly from your traditional IRA (SEP and SIMPLE IRAs do not apply) to a qualified charity, like the Catholic Foundation of Michigan. The distribution must be one that would otherwise be taxable to you (not from a ROTH IRA, for example) in order to count as a QCD.
- Up to $100,000 of QCDs can be excluded from your gross income each year which can be an excellent tax benefit.
- If you file a joint return, your spouse (if older than 70 ½ ) can exclude an additional $100,000 of QCDs.
- (Please note that you are then not able to deduct the QCD as a charitable contribution on your tax return).
The QCD satisfies the annual RMD that you would otherwise receive (and owe tax on) as a distribution from the IRA. Please note that distributions that you receive and subsequently transfer to a charity cannot qualify as QCDs. That type of distribution would not only be a taxable event for the donor but would also leave a smaller, after-tax distribution to the charity. The benefit of the QCD is that you get the immediate tax deduction and the charity gets a larger donation.
Please consider utilizing this easy, effective strategy to support a qualified charity such as a fund with the Catholic Foundation to benefit your beloved parish, school or nonprofit organization. If you have further questions, please visit the Catholic Foundation’s Preferred Advisor page to find an advisor that fits your needs.
By: Michael Tindall, Preferred Professional Advisor
Michael Tindall is a Private Wealth Manager with Hilltop Investment Counsel, a Member of Advisory Services Network, LLC.