What do I do with my IRA required minimum distribution?
by David Warnock
Q: I’m forced by law to take a required minimum distribution (RMD) from my Individual Retirement Account (IRA), but because of other sources of income, I don’t need the money. Is there a way to pass on my required distribution to Heaven’s Family without paying tax on it?
A: Yes! The IRA Qualified Charitable Distribution (QCD) provisions for 2013 makes your desire possible if you are at least 70½ years old.
Under the provision, an owner of a traditional IRA—who is at least 70½ years of age—may make a distribution directly from his or her IRA to a charity. This distribution goes toward satisfying the required minimum distribution without being counted as taxable income. The gift, however, cannot be counted as an income tax deduction because the monies are tax-free.
To initiate an IRA Qualified Charitable Distribution, contact your IRA plan administrator. Instruct him or her that you want to generate an IRA distribution directly to Heaven’s Family, and he or she will help you complete the proper distribution form. It is important that you or the plan administrator provide Heaven’s Family with information about the donor and the gift. This is necessary because Heaven’s Family must provide you with a written receipt of each IRA rollover contribution for your IRS records.
Some important points include:
• The provision applies to traditional IRAs and Roth IRAs (although Roth IRAs do not have a RMD while the plan owner is alive). The provision does not apply to other qualified retirement plans, although SEP and SIMPLE plans offer some exceptions.
• The deadline for an IRA Qualified Charitable Distribution is December 31, 2013. It is unknown at this time if the QCD provision will extend beyond 2013.
• The plan owner must be at least 70½ at the time of the distribution.
• The tax exclusion amount is limited to $100,000 per year, per plan owner.
• The charity must be a qualified public charity, like Heaven’s Family. Donor-advised funds, supporting organizations and private foundations do not qualify.
You are very wise to lay up treasures in heaven via your IRA RMD! If you are 70½, it is very likely that you’ll be enjoying those treasures sometime in the next thirty years!
The fine print: We are neither tax accountants nor legal representatives. We strongly recommend you see a tax or financial professional for advice concerning your particular situation.
David Warnock is happy to assist you with your questions regarding strategic stewardship. You can reach him at (412) 833-5826 or email him at DavidW [at] HeavensFamily [dot] org.