Age 72+ with an IRA?

Donate via your Required Minimum Distribution

If you have an IRA account and are age 72 or better, the Required Minimum Distribution (RMD) rule likely applies to your account or an inherited account. This rule requires that a minimum amount be withdrawn from your account each year. If you do need all of the funds at this time, this rule provides an opportunity to designate part or all of your RMD as a Qualified Charitable Donation (QCD) to an eligible charity that you care about. This brief overview explains Required Minimum Distributions and how to donate part or all of your RMD each year to GALDEF.

What are Required Minimum Distributions (RMD) and Qualified Charitable Donations (QCD)?

You cannot keep money in your employer-sponsored retirement/IRA plan(s) indefinitely. Once you reach retirement, you will need to withdraw a minimum amount of money from these plans annually. These withdrawals are called Required Minimum Distributions or RMD. 

Examples of such retirement plans include employer-sponsored profit-sharing plans, 401(k) plans, 403(b) plans, 457(b) plans), traditional IRA, inherited IRA, inactive Simplified Employee Pension (SEP) plan, or inactive Savings Incentive Match Plan for Employees (SIMPLE) IRAs.

Note: Roth 401(k) accounts are exempt from the RMD rules as long as the owner is alive.

If you are the account owner of one of these types of accounts and you have reached age 72 (73 if you reached age 72 after December 31, 2022), the RMD rule applies to you. ( See exemptions for pre-1987 contributions to a 403(b) plan.)

If you inherited this type of plan after the death of the plan holder, the balance of the account must be distributed within ten years, except under certain circumstances. (Exceptions include a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the employee or IRA account owner.)

What are the benefits of designating my RMD as a QCD?

Because individuals who hold IRAs are required to take annual Required Minimum Distributions (RMD), this often increases the individual’s total taxable income. By donating a RMD to a charity in the form of a Qualified Charitable Donation (QCD), the donor is absolved of the annual RMD, thereby avoiding being pushed into higher income tax brackets and preventing  phaseouts of other tax deductions, such as personal exemption and itemized deductions. RMDs that are not donated can also sometimes trigger high taxes on Social Security income.

A QCD allows individuals to donate up to $100,000 from a taxable IRA directly to a charity instead of taking their yearly Required Minimum Distribution (RMD) themselves. Couples who file taxes jointly can make separate QCDs for a total of $200,000 between both IRAs. For a QCD to count toward the current year’s RMD, the funds must come out of an IRA by the RMD deadline, generally December 31.

When you give your QCD to charity, the amount you donate is excluded from your taxable income, which can reduce the impact of certain tax credits and deductions, like Social Security and Medicare. By donating to a qualifying charity, a QCD can potentially enable a donor to give a bigger charitable gift than they could if they just donated cash or other assets.

How do I donate my RMD as a QCD to GALDEF?
  1. Calculate your RMD. Use these  RMD worksheets to find out what your minimum required withdrawal is this year. 
  2. Plan your withdrawal. Decide which account(s) to make withdrawals from and how much of that withdrawal you plan to give. You may have an RMD total and certain accounts with individual RMDs;  learn more
  3. Contact your financial advisor or IRA custodian (where your IRA is held), and let them know you want to make a QCD to the Genital Autonomy Legal Defense and Education Fund (GALDEF). We are an IRS-registered 501(c)(3) nonprofit organization and eligible to receive tax-deductible contributions (EIN #88-3207129).
  4. Specify the amount of the QCD and ensure that the withdrawal is a tax-free distribution directly to charity rather than a taxable personal withdrawal. Send a letter or email to GALDEF to notify us of your intent to make your QCD to us. Some custodians will send the QCD check directly to us. Others will make it payable to us but send the check to you to mail. Other custodians provide the IRA account holder with a checkbook with which to make a QCD. Whether the check is mailed directly to us or to you as the IRA holder, make sure to request a receipt for your tax records. Our mailing address is 1717 E. Vista Chino, Ste. A7-455, Palm Springs, CA 92262.
  5. Claim your tax benefits. When you file your taxes for the year, include your QCD on the relevant tax document ( Form 1099-R,  Form 1040, or  Form 8606). Report the QCD amount on IRS Form 1040 on line 4a. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter “QCD” next to this line. IRA custodians will report a QCD as a normal distribution on IRS Form 1099-R for any non-inherited IRAs. Your tax preparer can also help you with this.
  6. Look ahead to next year. Once you meet the RMD criteria, you will have a RMD each year until the account is depleted, barring significant policy changes. This is a good time to start planning how you will distribute next year’s withdrawal. Be aware that changes to the tax code could shift your RMD and related processes year-to-year.

Disclaimer: This information is provided as a public service to highlight a matter of current interest. It is not intended to constitute a full review of any subject matter, nor is it a substitute for obtaining financial or legal advice from an accountant or financial advisor, or an attorney. Information contained within was accurate at the time of publication in June 2023.