Insights for Your Journey

As the owner of a traditional IRA, you are likely aware that required minimum distributions (RMDs) start once you reach age 72. However, you may not have been aware that an RMD can be taken in the form of a qualified charitable distribution, where a qualified charity receives all or part of your RMD, satisfying your obligation and offering a potential tax advantage. Withdrawals taken after age 59½ from traditional IRAs are taxed as ordinary income and, if you don’t need this income, it may feel like an unnecessary tax bill. Giving these funds to charity impacts a cause you care about and reduces your tax bill.

Here are a few general guidelines to know if qualified charitable distributions sound like they might be a fit for you.

  1. You can only make a qualified charitable contribution after you reach age 72.
  2. There is a cap of $100,000 on qualified charitable distributions per individual.
  3. The charity must be a qualified 501(c)3 organization.
  4. You must make your distribution check payable directly to the charity in question, not to a director or another individual in the organization.

Want to give part of your RMD as a qualified charitable distribution and take the rest for yourself? You can! These would be separate transactions, but if they add up to the necessary RMD, you’ll meet the requirement.

If you are interested in supporting a charity, a qualified charitable contribution may be a good option for you to consider. Talk with your advising team to see how this works into your financial plan!

The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.

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