Did you know that if you reach age 72 on or after Jan.1, 2023, after your 73rd birthday you are required to withdraw a minimum amount annually from your traditional IRA retirement accounts (including SEP IRA, SIMPLE IRA)? This is fittingly called a required minimum distribution (RMD). The age requirement changed from 72 to 73 this year through the passing of the SECURE 2.0 Act.
These types of retirement accounts are set up to defer the tax until that income is distributed to the individual. Many of our donors tell us they don’t need a portion or all of their distribution and ask how they can instead use those dollars charitably. The IRA Charitable Rollover, or qualified charitable distribution (QCD), permits taxpayers to instead make donations from their IRA accounts directly to eligible charitable organizations without it counting toward their income (and consequently, avoid taxes on the distribution). Here at the Foundation, you can roll your required distribution up to $100,000/year into any fund that’s not donor advised (Community Champions, designated funds, scholarship funds, field of interest funds, or unrestricted funds).
Additionally, the SECURE 2.0 Act permits an individual to make a one-time $50,000 distribution to a charitable remainder trust or charitable annuity and a one-time election for a contribution to be treated as if it were a QCD made directly to a charity.
Looking to the future, the age at which you must start taking a RMD will bump up from 73 to 75 in 2033.
Want to learn more? Reach out to your financial advisor or your Community Foundation philanthropy advisor.