Note: Chicago Master Singers does not provide any legal, tax, or financial advice to any member or donor. Individuals should discuss and review any potential charitable bequest and/or tax planning strategies with their own advisors before making any final decisions.
If you have savings in a pre-tax retirement account, such as a traditional IRA, you’ll need to begin taking required minimum distributions (RMDs) once you reach age 72 (or 73 if born after 1950), whether or not you need the funds to pay for your daily living expenses. These mandatory withdrawals are taxed as ordinary income as they are withdrawn to your own personal account. If you instead directly transfer some or all of your RMD to a qualified charity, such as Chicago Master Singers, there will be no tax liability for the distribution that is forwarded directly to CMS.
The IRS allows individuals over age 70 and a half to donate up to $100,000 each year from an IRA directly to a qualified charity, with no tax liability on that withdrawal. This type of donation from an IRA is called a qualified charitable distribution (QCD).
The benefits of QCDs include:
Tax Savings
One of the primary advantages of making charitable donations through QCDs is the potential for tax savings. By directing funds straight from your IRA to a qualified charity, the distributed amount isn't counted as taxable income.
Meeting Required Minimum Distributions (RMDs)
For retirees who are required to take minimum distributions from their IRAs, QCDs can be an excellent way to satisfy this requirement while supporting charitable causes.
Reducing Adjusted Gross Income (AGI)
QCDs can lower your AGI, which may have positive effects on other aspects of your financial planning, such as reducing Medicare premiums or lowering the impact of the taxation of Social Security benefits.
Additional considerations that might apply to some individuals:
401k and 403b plans
Current regulations disallow making charitable donations directly from these plans. In order to pursue this giving approach, you must convert some or all of your 401/403 savings to a simple IRA plan and make the donation from the IRA directly to the charity.
Inherited IRA
If you are the recipient of an inherited IRA, RMDs will apply to this inheritance. These RMDs may also be directed toward a charity with a reduction in ordinary income tax liability (also subject to the 70 and one half year age requirement).
Please contact us at [email protected] or call 847-604-1067 if you have any questions.
If you have savings in a pre-tax retirement account, such as a traditional IRA, you’ll need to begin taking required minimum distributions (RMDs) once you reach age 72 (or 73 if born after 1950), whether or not you need the funds to pay for your daily living expenses. These mandatory withdrawals are taxed as ordinary income as they are withdrawn to your own personal account. If you instead directly transfer some or all of your RMD to a qualified charity, such as Chicago Master Singers, there will be no tax liability for the distribution that is forwarded directly to CMS.
The IRS allows individuals over age 70 and a half to donate up to $100,000 each year from an IRA directly to a qualified charity, with no tax liability on that withdrawal. This type of donation from an IRA is called a qualified charitable distribution (QCD).
The benefits of QCDs include:
Tax Savings
One of the primary advantages of making charitable donations through QCDs is the potential for tax savings. By directing funds straight from your IRA to a qualified charity, the distributed amount isn't counted as taxable income.
Meeting Required Minimum Distributions (RMDs)
For retirees who are required to take minimum distributions from their IRAs, QCDs can be an excellent way to satisfy this requirement while supporting charitable causes.
Reducing Adjusted Gross Income (AGI)
QCDs can lower your AGI, which may have positive effects on other aspects of your financial planning, such as reducing Medicare premiums or lowering the impact of the taxation of Social Security benefits.
Additional considerations that might apply to some individuals:
401k and 403b plans
Current regulations disallow making charitable donations directly from these plans. In order to pursue this giving approach, you must convert some or all of your 401/403 savings to a simple IRA plan and make the donation from the IRA directly to the charity.
Inherited IRA
If you are the recipient of an inherited IRA, RMDs will apply to this inheritance. These RMDs may also be directed toward a charity with a reduction in ordinary income tax liability (also subject to the 70 and one half year age requirement).
Please contact us at [email protected] or call 847-604-1067 if you have any questions.
Click here for additional ways to support CMS!
Chicago Master Singers
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