Tax Efficient Giving from Your IRA
With so many financial demands on your plate, it can be hard to find the extra funds to give to the causes you care about most. And for many people, one core cause is the ministries they care about. If you own an individual retirement account (IRA), there’s a tax-efficient way you can give from it: Donating your required minimum distribution (RMD) from your IRA to a ministry through a qualified charitable distribution (QCD).
What is a required minimum distribution (RMD)?
A required minimum distribution, or RMD, is the minimum amount of money you must withdraw from a tax-deferred retirement plan (in this case, an IRA) after you reach a certain age. That used to be age 70½, but in 2022, the SECURE ACT 2.0 issued these changes:
- If you turned 72 in 2023, your RMD is due in 2024.
- If you turn 73 between 2024 and 2032, your RMD age will be 73.
- If you turn 74 after 2032, your RMD age will be 75.
The reason for the change? People are living longer and therefore drawing on their retirement money for longer stretches of time. With the passage of this act, you can delay taking RMDs until later, which can give your money more time to potentially grow.
What is a qualified charitable distribution (QCD)?
A qualified charitable distribution (QCD) is a direct transfer of funds, up to $108,000 (indexed for inflation) in 2025, from your IRA to a qualified charity, which can include Lake Lundgren. You must be 70½ or older to do a QCD.
Because your IRA custodian (the bank or financial institution that holds your IRA) sends these funds directly to your church or charity of choice, your contribution is not taxed. Again, this applies to your IRA if you are 70 ½ or older.
What are the benefits of giving your RMD to your church?
Giving your RMD through a QCD can provide you with a means to give to Lake Lundgren that you may not have otherwise. Doing so also can:
- Satisfy your RMD. A QCD counts toward your annual RMD if it comes directly out of your IRA. You can give up to the full amount of your RMD (as long as it’s under $108,000 in 2025), or donate part and withdraw the remainder.
- Provide tax relief. Because you never directly touch those funds in a QCD, you can reduce or avoid the taxes you would incur by taking your RMD otherwise. Additionally, QCDs lower your adjusted gross income (AGI) and therefore potentially reduce taxes on Social Security and avoid increased Medicare premiums.
- Support your camp’s mission and ministry. Like other charitable contributions, a QCD is a way for you to practice generosity while also furthering Lake Lundgren’s mission.
3 easy steps to give a QCD
The process for completing a QCD to support Lake Lundgren Bible Camp is relatively straightforward. Here’s what you need to do.
- Contact LLBC (715-324-5457) to give them a heads up.
- Request a distribution form from the institution that administers your IRA. In the QCD section, fill out Lake Lundgren’s info. Keep in mind, this transaction must be completed by December 31. Please allow several weeks for processing.
- The IRA custodian will mail the check directly to Lake Lundgren. Upon receipt, camp will send you an acknowledgment letter to confirm the date and amount that was received through your QCD.
Disclosure: The information provided is for general educational purposes only and should not be considered legal, accounting, or investment advice. Please consult with a qualified attorney, accountant, or financial advisor for guidance specific to your situation.
