Fall, the season of cooler weather, pumpkin spice, and creative costumes, is here! And before we know it, there will be no more calendar pages to flip. (Does anyone even use a paper calendar anymore?)
For those age 70½ and older, fall also means it’s time to think about your Required Minimum Distribution (RMD). Your RMD may be taxed as ordinary income when you file your taxes, reducing the amount you actually receive by 25% or more depending on your tax bracket.
In other words, a portion of your hard-earned retirement income may end up going to federal and state taxes.
But there is a solution! You can give your RMD to a qualified charity.
Our local communities are home to more than 100 charitable organizations that could benefit from your support. By working with your financial institution to have your RMD distributed directly to a designated charity, you can support causes you care about while avoiding income tax on that distribution.
A direct charitable distribution isn’t the only option. Charitable Remainder Trusts (CRTs) can also be a powerful tool for strategic giving. A CRT allows you to take an immediate tax deduction and reduce or defer capital gains tax on appreciated IRA assets.
There is an annual limit in 2025 of $108,000 per individual. The trust then pays you, or another named beneficiary, a fixed dollar amount or percentage for a determined period of time. Once the term ends, the remaining assets in the trust go to the charities you have chosen.
One important consideration: a CRT is irrevocable. Once you transfer funds to the trust, you cannot take them back outside of what is allowed in the trust agreement.
Your 2025 RMD deadline will be here before you know it. How could you help strengthen our community? What legacy would you like to leave?
If you have questions, contact your financial or legal advisor. For guidance on charitable giving, reach out to Golden Belt Community Foundation at 620-792-3000 or jason@goldenbeltcf.org.
Jason Murray is the executive director of the Golden Belt Community Foundation.
