*by Kevin Rigg, Director of Financial Life Planning, Lead Advisor, CFP®, CPA*

If you inherited a retirement account or are over 73 years old and own a retirement account, you are likely subject to Required Minimum Distributions (RMDs). An RMD is calculated each January based on the prior December 31st account value divided by a factor tied to your age at the end of the current year.

In most cases, an RMD is fully taxable as ordinary income, but the IRS provides a way to lessen the tax impact through Qualified Charitable Distributions (QCDs). A quick primer on QCDs:

Allows those 70 ½ years of age or older to make gifts directly from their individual retirement account (IRA) to a qualified charity.
Counts toward satisfying the RMD without being treated as taxable income.
Often leads to net lower taxes compared to making outright cash gifts.

Our goal is to help you make any desired QCDs by mid-January and complete RMDs soon thereafter. To make this happen, you can expect to hear from your Advisor before the end of the year to do the following:

Estimate next year’s RMD and review prior year QCDs (if any).
If QCDs are desired, confirm gift amounts and any changes to the recipient list.
Obtain the mailing address for any charities not already on file.

The steps above will allow us to prepare the necessary QCD paperwork ahead of time and get it out to you for your signature, so distributions are completed within the mid-January timeline. While it may feel a bit odd to be making charitable contributions in January rather than December, we assure you the charities will be happy to receive the funds at any time!