A qualified charitable distribution, also known as a QCD, can help reduce the taxes you pay on your annual required minimum distribution (RMD).  This strategy allows you to give to charities of your choice through the Foundation for Lake Chapala Charities while limiting your tax burden after you turn 70.   It is available even if you take a standard deduction.

 

 RMD is the annual Required Minimum Distribution that you must start taking out of your retirement account after you reach age 73.  The amount is determined by the fair market value of your IRAs at the end of the previous year, factored by your age and life expectancy.  

 

As it stands right now, you must start taking the required minimum distributions from 401(k) accounts, traditional IRAs, SEPs and similar retirement savings accounts (other than Roth IRAs) in the year you turn 72 (although you have until April 1 of the following year to take your first RMD).  At age 72, the percentage is 5%.  

 

Required minimum distributions may not be rolled over to another IRA or retirement plan.  You set aside part of your earnings in an IRA or other tax-advantaged retirement account, and you did not pay income taxes on these dollars.  The US government lets you delay paying taxes, but RMDs are how the government ensures you will eventually be taxed.  

 

Qualified charitable distributions, or QCDs, allow you to transfer money from an IRA to an eligible nonprofit organization such as the Foundation for Lake Chapala Charities.  These distributions are not taxable but they still count toward satisfying your required minimum distributions for the year.  

 

Check with your financial planning professional or your tax consultant or other financial expert for more information.  Find out  how a QCD works, and how you can benefit lakeside charities and as well as yourself!