An RMD (required minimum distribution) is a mandatory withdrawal an IRA owner who is 73 or older must take. The RMD amount is based on the market value of the IRA account on the last day of the previous year.

Because of the stock market high on 12.31.23 combined with further increases in the financial markets during the first half of this year, more of your donors will have additional funds in 2024 available to spend and save—or give! Their IRA can be a great source for them to make their charitable gifts.

When you are meeting with your donors, here are three important things to know about RMDs:

• RMDs are taxed as ordinary income, causing your AGI (adjusted gross income) to increase, which may push you into a higher tax bracket. This can result in higher Medicare premiums and, depending on where you live, the possible taxation of your Social Security benefits.
• There are substantial penalties if you miss the deadline to start taking RMDs, or if you take less than your required amount.
• Once you turn 73, you’re required to take your RMD by Dec. 31 each year. QCDs (qualified charitable distributions) are an ideal option for philanthropic IRA owners because you avoid paying income tax on the funds and QCD amounts can count towards your RMD. The 2024 QCD limit is $105,000 for individuals and $210,000 for couples with separate IRAs. Any amount up to those maximums may be given.

With record numbers of Boomers turning 73 every day, more and more of your older donors will be deciding what to do with their “supersized” RMDs. Reminding them of the QCD opportunity is a “super” strategy that will certainly pay dividends this year.

Sharpe’s brochure “Making Retirement Accounts Less Taxing” can help. Personalize and order today!