Individual Retirement Account (IRA)

Jane is 73 years-old and has been a member of her local church for 40 years. Thanks to careful planning, she does not need to use the required minimum distribution (RMD) from her Individual Retirement Account (IRA) for monthly living expenses. Due to her age she is, however, government mandated to take annual IRA distributions. Since income tax is due on these distributions, Jane annually chooses to direct her annual RMD to her church (by April 1). Since churches are nonprofits their process is known as a qualified charitable distribution (QCD) and Jane will not pay income taxes. She has the option to gift up to $100k every year.

Note, the CARES (Coronavirus Aid, Relief, and Economic Security) Act suspended RMDs from IRAs in 2020. This waiver of RMDs for 2020 is not limited to those who are affected by COVID-19. Any withdrawal from an individual’s IRA in 2020 is no longer deemed to be an RMD. And any individual who took a RMD withdrawal in 2020 may transfer what was withdrawn back into the IRA within 60 days of withdrawal date.