If you are 70½ or older, you can donate your IRA Required Minimum Distribution (RMD) to your favorite charity as a qualified charitable distribution (QCD). The donation counts as your required minimum distribution but does not increase your adjusted gross income. This can be particularly helpful if you do not itemize your deductions and cannot deduct charitable contributions. In addition, keeping some or all of your RMD out of your adjusted gross income could help you avoid the Medicare high-income surcharge or reduce the amount of taxation on your Social Security benefits.
In order to be tax-free, the IRA distributed funds must be transferred directly from the IRA to the charity. If you withdraw it from the IRA first and then give it to the charity, you can still deduct the gift as a charitable contribution (if you itemize), but the withdrawal amount will be included in your adjusted gross income.
If you would like to donate all or a portion of your RMD to charity, let us know. Your distribution check can be mailed by Schwab directly to the charitable organization of your choice. We recommend contacting the charity in advance to verify the mailing address it should be sent to and to give them a heads-up that they will be receiving a check from your IRA. In addition to helping identify who the donation is from, the charity can take your contact information and send you an acknowledgement for your tax records. You can also give the charity special instructions about which fund or program you would like to support.
Donating your RMD can be not only beneficial to you from a tax perspective, but you can help others as well!
This information is provided for general information purposes only and is not intended to provide specific investment advice. The information in the articles should not be relied on for tax reporting, accounting, or valuation purposes. Past performance is not a guarantee of future performance. It is not possible to invest directly in an index.
Please note that links to third party websites are provided as a courtesy. When you link to a third-party website, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites. Nor are we liable for any issues or consequences arising out of your access to or your use of third-party technologies or websites made available through this website.