So many acronyms…

 

QCD, IRA, RMD - what do they mean and why should you care? The short answer is that these acronyms are terms that could benefit YOU and SPARK!  

 

Chances are, if you’re reading this, you have been philanthropic in some nature. And if you’re over 70 ½ or know someone who is, you will want to know how to utilize your Individual Retirement Account (IRA) to make charitable donations that are both tax-advantageous and increase your philanthropy giving strategy! 

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People who hold Individual Retirement Accounts (IRAs) are required to take the required minimum distribution (RMDs) each year beginning at age 73—even if they don’t need or want the funds. That same required minimum distribution increases the IRA holder’s total taxable income. Yikes! Here is how Qualified Charitable Distributions (QCDs) can be tax-advantageous and help SPARK. 

 

Tax-Advantages: Assuming you’re not in need of your IRA distribution funds and are required to take your RMD, you can avoid the 25% tax penalty by transferring those funds directly to an IRS-eligible non-profit. Additionally, charitable giving can be tax-deductible. 

 

Philanthropy Giving: Beyond the tax advantages of giving, there are also personal benefits. Giving has been proven to increase a person’s mood and sense of well-being.

 

With a Traditional, Rollover or Inherited IRA, the following requirements apply to qualify for QCD: 

• Over the age of 70½ 

• Have met your (RMD) and continue to do so annually after that 

• Maximum annual distribution applies 

• Charities must be a 501(C)(3) or a house of worship and funds must be directly transferred to the charity 

• SEP and SIMPLE IRAs qualify 

 

So, while that may be clear as mud in our sensory boxes at SPARK, we hope this introduction gives you something to consider to help both you and SPARK. For more information, contact Darcy Elmer, Finance Chair with SPARK’s Board of Directors, and Senior Fiduciary Officer at Associated Bank Private Wealth, today at (507) 424-3438 or Darcy.Elmer@AssociatedBank.com.