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). 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 charitable distribution by donating directly from your traditional IRA 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. You can make QCD donations beginning at age 70 1/2 even before RMDs are required.
Since so many people no longer itemize on their IRS Form 1040 to receive tax deductions for charitable donations, a qualified charitable deduction, which reduces your adjusted gross income, can be a better tax move for those seeking to give to a charity.
By the way, Poolesville Seniors is a 501(c)3 and is qualified to receive these donations. See an explanation at Qualified Charitable Distribution Donations – Poolesville Seniors