2018 Annual Report DOH

Your Guide to Using RMDs for Qualified Charitable Distributions

With all the recent tax changes, financial planning can be daunting. Developing a sound strategy for determining where your distributions go can help you take control, especially when it comes to your retirement accounts. Individuals with retirement accounts, such as 401(k)s or traditional IRAs, are required to withdraw a certain amount every year once they reach age 70 ½. This amount – called a Required Minimum Distribution, or RMD – is taxed by the IRS as ordinary income, which means it’s added to your total taxable income for the year. However, you may be able to reduce the effect of the RMDs on your income by making Qualified Charitable Distributions. This allows you to exclude the amount payable to the charity from your income. Qualified Charitable Distributions are especially compelling considering recent tax changes that raised the

standard deduction and placed limitations on what you can deduct. Tax Benefit Option: When planning your IRS Required Minimum Distributions with your tax advisor, consider having the withdrawal check of up to $100,000 made payable to a qualified charitable organization. That way you can avoid it being counted as income. For instance, we can send the RMD directly to your favorite 501(c)(3) charity or the Catholic Financial Life Foundation. (The foundation provides financial support for Catholic schools, parishes, seminarians, and helps the poor.) Simply contact us to request the Qualified Charitable Distribution form. Non-deductible Option: There are a couple options you can take when spending your RMD that would be taxed as ordinary income. You may use RMDs toward

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