RMDs and QCDs—The Time Is Now | Sharpe Group
Posted February 5th, 2024

RMDs and QCDs—The Time Is Now

According to an article published recently in The Wall Street Journal, Fidelity Investments, a popular IRA administrator, predicts that their clients’ required minimum distributions (RMDs) could hit $25 billion this year. Annual RMDs are calculated by taking the IRA account balance on Dec. 31 of the previous year and dividing it by the owner’s life expectancy. A robust stock market at the end of 2023 along with an increase in the age at which people are required to begin taking distributions (now age 73) have contributed to
this record high.

What does this mean for your donors?

The time is now for RMDs and QCDsSimply put, if they are required to take more out of their IRA in 2024, they could be facing higher taxes. Because of this, there may never be a better time to remind them about the advantages of making their gifts through a qualified charitable distribution (QCD).

This year, QCDs avoid income tax on any amount up to $105,000 that is paid directly to charity. Even eligible donors who don’t have to begin to take their RMDs until age 73 may prefer to make gifts from IRAs, particularly if they are unable to itemize deductions on their income tax return. Their QCDs can be made from funds that have never been—and will never be—subject to income tax.

Additionally, there is an option to fund a charitable remainder trust or a charitable gift annuity with a QCD, though these gifts are subject to limitations.

As with all planned giving marketing, it’s best to take the “multi-channel” approach when communicating with your donors who are 70+ about this way to give.

  • Send a printed brochure to all eligible donors outlining the advantages and ease of making a QCD.
  • Include ads and articles about QCDs in other publications, such as an annual report or magazine.
  • Have a booklet on retirement giving options available to mail to targeted donors and to use as a leave-behind for in-person meetings.
  • Feature stories about donors who have made QCDs in your newsletter.
  • Make sure your website has information about QCDs, including instructions on tax reporting.
  • Create electronic campaigns directing donors to your website’s retirement giving page.

As the saying goes, “Timing is everything.” For QCDs, the time is definitely now! ■

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