Attention 73 Year Olds
Congratulations if you are turning 73 in 2024 or have already achieved that milestone!
Seventy-three is the age when you must begin taking your Required Minimum Distribution (RMD) from your 401(k), 403(b) and Traditional IRA. A Roth IRA has no required distribution. The amount of your RMD is based on a formula that includes your IRS determined life expectancy and the value of your account on December 31 of the previous year. You may have received a notice from the IRS stating the amount you need to withdraw in 2024 (based on the value on December 31st 2023). It may be possible to make these charitable donations before you are required to do so. Obviously, it is recommended that you discuss this with your financial advisor or tax accountant. But don’t wait too long, the distributions may take a few weeks depending on how busy the retirement account provider is.
You can minimize the amount of tax you pay on this distribution by donating directly from your account to a qualified charity. These Qualified Charitable Donations (QCDs) are tax-free donations that must be made directly to the qualified charity and cannot be funneled through your checking/savings account. The QCD is treated as an above-the-line deduction, so you can claim it even if you do not itemize and you take the standard deduction. You won’t increase your taxable income — which could have consequences for both your tax bracket and the taxation of Social Security benefits.
By the way, Poolesville Seniors is a 501(c)3 and is qualified to receive these QCD donations. See an explanation at Qualified Charitable Distribution Donations – Poolesville Seniors