Required Minimum Distribution Planning - Make An Impact With Your IRA

For those over the age of 72 who own an Individual Retirement Account (IRA), it’s important to plan for your Required Minimum Distribution (RMD). 

The IRS requires Traditional IRA account holders to start taking an annual RMD when reaching age 72, even if the money isn’t wanted or needed at that point in time.  These distributions are taxable at ordinary income tax rates based on the IRA owner’s current tax bracket.  

For those who have to take an RMD and are charitably inclined, a Qualified Charitable Distribution (QCD) may be appealing.  A QCD allows individuals who are 70½ years old or older to donate up to $100,000 total to one or more charities directly from a taxable IRA.

QCDs are tax-free for eligible IRA owners and are not reported as income.  This means that donors may avoid being pushed into higher income tax brackets and prevent phaseouts of other tax deductions, however, there are some other limitations that should be discussed with a tax advisor.

There are a few rules that apply to Qualified Charitable Distributions:

•  You must be at least 70 ½.

•  The funds must be directly transferred from the IRA custodian to the eligible charity (as defined by the IRS.)

•  Donor advised funds (DAF) are not permitted to receive QCDs.

•  The QCD gift amount excluded from gross income isn’t deductible.

•  Donations from a Beneficiary IRA or Beneficiary Roth IRA are eligible if the beneficiary is at least age 72.

•  The maximum amount that can be donated through a QCD in 2022 is $100,000. Married individuals filing a joint return may exclude up to $200,000 if each spouse donates the individual maximum of $100,000.

•  State tax rules on QCDs vary, so donors using charitable distributions should consult a tax advisor.

•  A donor can make a QCD that exceeds the individual’s RMD for a given year, however, that extra distribution can’t be carried over to meet the minimum distributions for future years.

If you have questions or are interested in a donating to charity while possibly benefiting from this distribution strategy, please reach out to us at or 630.796.6385

This commentary was created by Black Diamond Planners and is for informational purposes only. The views expressed are based on current market conditions and are subject to change. There are no assurances that the techniques and strategies discussed herein are suitable for all investors or that the predicted results will occur. The commentary herein does not constitute investment advice, tax advice, or legal advice. Tax strategies should be discussed with a licensed accounting professional. All investments are subject to risk, and past performance is no guarantee of future results.

Investment advice offered through HighPoint Advisor Group, LLC, a registered investment advisor.