It’s not alchemy … or alphabet soup. It’s a pretty straightforward process … that might make sense for you.
The Coronavirus Aid, Relief, and Economic Security [CARES] Act, enacted in March 2020, suspends Required Minimum Distributions from IRAs for 2020. Please consult your financial advisor, tax attorney, or IRA custodian for additional details.
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.