Reducing Tax Liability on an RMD
RMDs are Required Minimum Distributions you must take every year from your retirement savings accounts, including traditional IRAs, and employer-sponsored plans such as a 401(k) or 403(b), starting at age 72.
- Anyone age 70 1/2 can make charitable distributions from their traditional IRA, also known as a Qualified Charitable Distribution (QCD). Making QCDs can lower your overall income to be taxed.
- If you’re turning 72 this year and taking your first RMD, you have until April 1, to do so. For each subsequent year, your RMD must be taken by December 31.
- People over age 72 (70 1/2 if you were born on or before June 30, 1949), must take their RMD by December 31 each year.
- Roth IRAs and 401(k)s are not subject to RMDs.
What if I don’t need the RMD assets?
You may donate up to $100,000 annually to qualified charities such as FGC. Generally, qualified charitable distributions (QCD) aren’t subject to ordinary federal income taxes. As a result, they’re excluded from your taxable income.
How are RMDs calculated?
Calculating RMD amounts can be complicated, so please consult a financial advisor.
Learn more about making a charitable gift by making a distribution through your IRA here.
Updated December 2024