IRS rules require individuals who are 73 or older to take required minimum distributions (RMDs) each year from their tax-deferred retirement accounts. If you do not need all or part of your required minimum distribution funds for living expenses, it may make sense for you to avoid paying taxes on your required withdraw by donating all or part of your RMD from a Traditional IRA directly to Baltimore Clayworks. The qualified charitable distribution (QCD) can satisfy your required minimum distribution for the year up to $100,000.
Important: the tax-free transfer will not count if you withdraw the money from your IRA first and then you contribute to a charity.
- Knowing the Rules:
- Individuals must be 70 ½ or older to make a qualified charitable distribution.
- For the qualified charitable distribution to count towards your RMD, the funds must come out of your account by the end of the calendar year, December 31.
- Traditional IRA accounts are eligible for qualified charitable distributions. Not eligible: 401(K) or 403(b) accounts. For questions about whether your tax-deferred account is eligible, be sure to consult your financial or tax advisor.
- To qualify, funds must be transferred directly from the financial institution that manages your IRA to a qualified charity like Baltimore Clayworks. The financial firm must issue a check from your IRA payable to Clayworks. If the check is made payable to you, the distribution would not qualify as a qualified charitable distribution and would be treated as taxable income.
- If you wish, you can divide up the required minimum distribute to send to multiple 501(c)(3) charitable organizations. The maximum total annual distribution amount that can qualify for a qualified charitable distribution is $100,000.
- Important: the tax-free transfer will not count if you withdraw the money from your IRA first and then you contribute to a charity. Always be sure to consult with your financial, tax and/or legal advisors before taking any action to ensure you are making the right decision for you.
- Information you might need to initiate a qualified charitable distribution: Baltimore Clayworks is a certified 501c3 FEIN#52-1409133, located at 5707 Smith Ave. Baltimore, MD 21209.