Give From Your IRA: A Smart Way to Support Whidbey
If you are 73 or older, you must take a yearly Required Minimum Distribution (RMD) from your IRA. For many people, this added taxable income is not needed and may even push them into a higher tax bracket.
A Qualified Charitable Distribution (QCD) is a simple way to give directly from your IRA to a qualified 501(c)(3) charity—without counting the distribution as taxable income. A QCD can also help keep your adjusted gross income lower, which may reduce certain income-related costs, such as Medicare IRMAA surcharges.
Key points:
- QCDs are available starting at age 70½.
- RMDs begin at age 73.
- QCDs must be a direct transfer from your IRA custodian to the charity.
- QCDs can total up to $111,000 per person per year (indexed for inflation).
- QCDs can only come from IRAs. If your assets are in a 401(k) or 403(b), your advisor can help you roll those funds into an IRA.
You can designate Whidbey Community Foundation as the recipient of your QCD:
EIN: 81-3860867
Address: P.O. Box 1135, Coupeville, WA 98239
If you have questions, we’re here to help: info@whidbeyfoundation.org or 360-660-5041.
Please consult your tax advisor to understand your specific situation.
Example: QCD vs. Taxable RMD
(Adapted from Ed Slott and Company)
| Without QCD | With QCD | |
| Income before IRA RMD | $200,000 | $200,000 |
| IRA RMD | $10,000 | $0 |
| Adjusted Gross Income | $210,000 | $200,000 |
| Standard Deduction – $24,000 + $1,300 for each over 65 (e.g., $24,000 + $2,600 =$26,000) | $26,600 | $26,600 |
| Taxable Income | $183,400 | $173,400 |
| Taxable Income Difference | $10,000 less | |
| Tax Rate | 24% | 24% |
| Tax Savings | $2,400 |
Note: Thanks to Ed Slott and Co, https://www.financial-planning.com/news/charitable-contributions-from-an-ira-face-new-tax-rules.