Tax Benefits of Qualified Charitable Distributions

Donate your Required Minimum Distribution (RMDs) to reduce your taxes

“We are blessed to have this opportunity to give back to Bello Machre,” say parents Chet and Elaine. They explain, “Our son is a resident at one of Bello Machre’s group homes and receives Meaningful Day Services, as well. We wanted to find a way to support Bello Machre that made the most sense for us.” While exploring options, Chet and Elaine learned about the opportunity to donate their Required Minimum Distribution (RMD).

“Giving from an IRA has always been an effective way to reduce your taxable income. Withdrawals to satisfy your RMD are taxed as income at your income level, but if you use your distribution (or part of your distribution) to make a gift to Bello Machre, you will not pay the income tax associated with the charitable portion,” explains Development Director Tracy Lynott. “Donating to a qualified charitable organization can help you meet your RMD while making a positive impact on your community!”

What is a Required Minimum Distribution for IRA?

Required Minimum Distribution (RMD) is an amount of money that the IRS requires anyone 73 or older to withdraw from tax-deferred retirement accounts each year, including IRAs and 401(k) and 403(b) plans. RMDs are taxed as ordinary income, so each withdrawal counts toward a person’s total taxable income for the year.

What are the rules for Required Minimum Distribution?

Starting in 2023, the age for Required Minimum Distribution (RMD) was raised to 73 from the previous required age of 72. So, a person’s first RMD must be taken by April 1 of the year after turning 73. After that, RMDs must be taken by December 31 of each year. Otherwise, you will face a 25% penalty tax on the RMD amount not withdrawn.

IRA RMD Table for 2023

An easy way to calculate the RMD that must be withdrawn is to consult the IRA’s RMD table.

Benefits of donating your RMD

You can donate your Required Minimum Distribution (RMD) as a Qualified Charitable Distribution (QCD). By giving that money (up to $100,000) to a charity instead of taking it as income, you will not be taxed.

New this year

As of January 1, 2023, anyone 70 1/2 years of age is now able to rollover up to $100,000 tax-free from your IRA to a qualified charity like Bello Machre. In addition, you can give a one-time QCD up to $50,000 through a Charitable Gift Annuity and receive guaranteed fixed payments for life.

This law is part of the Consolidated Appropriations Act that addresses retirement planning. In addition to adding the one-time distribution of up to $50,000 to a QCD, this new legislation updated the age for RMD to 73. If you are 73 years of age or over, the rollover offsets your RMD and you do not have to pay income tax on the charitable portion of your distribution.

In addition to tax benefits, making a QCD allows you to make a difference in your community by supporting a charity close to your heart.

“It’s a win-win situation,” Chet emphasizes. “We get a tax break but, more importantly, we get the satisfaction of knowing our donation to Bello Machre is making a difference in the lives of people like our son.”

Explore IRA Qualified Charitable Distributions

If you have an IRA and are interested in setting up a QCD, be sure to talk to a tax professional, first.

Get Started at the Bello Machre Planned Gifts Page

Donating your Required Minimum Distribution is one of many ways to support charities like Bello Machre. You can learn more about ways to give to Bello Machre, plus read inspiring stories from our donors when you visit our Planned Gifts page.

“Giving back to Bello Machre is the greatest feeling,” Chet and Elaine conclude. “If you can donate your RMD, you won’t regret it.”

IRA Charitable Rollover Gifts make an important impact on the people we support at Bello Machre! If you are of age, please consider giving back in this beneficial and meaningful way.