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Ways to Use Your RMD


Did you know that if you’re over age 70½ and taking your annual Required Minimum Distribution (RMD), you can use it towards a Qualified Charitable Distribution (QCD)? QCD’s are generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions. For example, to 2BC if you’re so inclined.

The amount transferred is excluded from income and can satisfy all or part of your RMD for the year. While you don’t get to take a tax-deductible contribution for your generosity, you also don’t pay income taxes on your IRA distribution. With the new tax rules and the increased standard deduction, this may not be a concern for you. (On a traditional IRA RMD payable to the IRA owner, the owner pays income taxes on the distribution.)  

For many, many years, Congress would approve QCD’s on an annual basis. However, a couple of years ago, Congress made QCD’s a permanent part of the IRS tax code. Check with your tax advisor and your IRA financial institution for the details on taking this type of distribution. If you want to do this for 2BC, the check must be payable to Second Baptist Church, 300 E. Kansas Street, Liberty, MO 64068. The institution will need 2BC’s federal tax ID number which is 44-0563818. Also, the IRA institution will note your name on the check stub so that the church knows who really sent the contribution. You will continue to receive a quarterly giving statement from 2BC.

Contact your tax advisor and financial advisor/institution for additional details on the minimal paperwork to take this type of distribution. And in case you’re wondering, the annual exclusion limit for a QCD is $100,000 if you’re so inclined!