Distributions from an IRA
There are tax benefits to making a charitable donation from your IRA if you were 70 ½ or older in 2019, or 72 in 2020, and own a traditional IRA that is now required to pay you a minimum distribution. These “RMD” payments are taxable. Individuals receiving RMDs from their IRA may instruct their IRA trustee to make payments directly to qualified charitable organizations such as Winter Nights. These payments are “Qualified Charitable Distributions” (QCD) that satisfy RMD requirements, but do not have to be reported as taxable income.
Why Is This Significant?
Funds withdrawn from your traditional IRA count as taxable income. RMD withdrawals that you do not need can push you into a higher tax bracket or result in a higher Medicare part B payment premium. Directing your RMD to be paid to charity can avoid this as well as help causes that you support.
Please consult your tax adviser for help choosing your best options.