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RMDs and Designated Funds

To ensure income tax is paid on tax-deferred retirement plan contributions, the IRS requires retired individuals over the age of 72 to make a specified withdrawal each year. This is called a required minimum distribution (RMD).

To ensure income tax is paid on tax-deferred retirement plan contributions, the IRS requires retired individuals over the age of 72 to make a specified withdrawal each year. This is called a required minimum distribution (RMD). A Qualified Charitable Distribution (QCD), a gift made directly from your IRA to a qualified charity, will help satisfy your RMD. And the QCD amount is not included in your taxable income. Although a QCD cannot be made to a donor advised fund, it can be used to contribute to your scholarship fund or a fund designated for a specific charity. A designated fund is an excellent choice if you want to support the same charity year after year. There are substantial penalties if you don’t meet your RMD, so using this giving tool can be very beneficial.

The Corona Aid, Relief, and Economic Security Act (CARES) allowed you to waive your RMD in 2020, but this provision does not extend to this year. Give us a call today, and let's talk about how you can use your annual RMD to support your favorite cause for years to come.



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