It’s not alchemy … or alphabet soup. It’s a pretty straightforward process … that might make sense for you.
Under current tax law, as modified in December 2019, individuals who have a traditional IRA and have reached the age of 72 must take a distribution from that account every year. The amount of that Required Minimum Distribution – or RMD – is set by the Internal Revenue Service, based on life expectancy.
These distributions are taxed as regular income.
Some individuals may find that this RMD places them in a higher tax bracket or affects other benefit programs [Social Security, Medicare]. Others may be looking for alternate revenue sources to continue their lifelong habit of charitable giving.
In these cases, the IRA holder may decide to send that RMD directly to a charitable organization. – through a Qualified Charitable Distribution -- the QCD. In this case, the individual instructs the custodian of her/his IRA – usually a bank or mutual fund – to make the distribution directly to a qualified charity – like the Wildlife Center of Virginia!
Through this process:
- The “requirement” for the annual distribution from the IRA is met;
- The funds sent to the Wildlife Center are not counted as taxable income;
- This distribution does not count as a charitable donation that is tax deductible. However, under the new tax law, it’s estimated that only about 10 percent of taxpayers will itemize their deductions; the vast majority will use the standard deduction, and that standard deduction is unaffected by the QCD.
- The Wildlife Center receives funds to continue its life-saving and life-changing work.
To decide if a QCD to the Wildlife Center of Virginia makes sense for you, please consult your tax professional and/or IRA custodian.
For additional information about including the Wildlife Center in your estate plans, please contact Ed Clark at firstname.lastname@example.org or Randy Huwa at email@example.com. All inquiries will be treated in strict confidence.