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If you have tax-deferred retirement accounts, the IRS requires you to begin to take taxable distributions from these accounts each year at age 72. These are called Required Minimum Distributions (RMDs). The RMD’s are generally taxable and thus can significantly increase your income taxes each year.
However, there is a great way to avoid paying taxes on some or all of your RMDs by sending them directly to a charity such as the Severn River Association as a Qualified Charitable Distribution (QCD). You can begin to make QCD’s when you turn 70 ½. To be clear, QCD’s count toward your yearly Required Minimum Distribution (RMD) and thus can possibly eliminate each year any taxes that otherwise would be due on your RMD.
Each taxpayer is allowed to directly transfer (contribute) up to $100,000 from an IRA account each year. So, if you are married and both spouses have an IRA, the total contribution can be as much as $200,000 – all of which would be tax-free.
The general requirements related to the Qualified Charitable Distributions are as follows:
Please consult with your financial planner to be sure a QCD makes sense for your circumstances.
Mailing Address: PO Box 146, Annapolis, MD 21404
Tax Identification Number: 52-1827749