Know Your Options

Plan now to optimize charitable giving and reduce taxes

Fall is the season when retirees with IRAs are considering how to manage required minimum distributions (RMDs). This age-related requirement means you have to take a distribution, even if you would prefer not to withdraw money, even if the economy has not been kind to your investments, and even if you are in the position to increase your IRA.

The good news is that you have alternatives:

You have the option to direct a portion of your RMD to charity. Contact your IRA administrators and ask them to make a qualified charitable distribution (QCD) directly to Mary Washington.

• You can distribute up to $100,000 this calendar year, and the QCD satisfies your RMD up to $100,000. (NOTE: Your spouse also may be able to contribute at the same level.)
• You will not be able to claim a charitable tax deduction on this directed gift, but you will not owe income tax on the withdrawal.

You also may opt to fund a charitable gift annuity at Mary Washington.

• This plan will provide income for life and reduce the value of your taxable estate.
• Payments from charitable gift annuities are taxed as income and do not qualify for income tax deductions. On the other hand, you will not pay income tax on the immediate transfer of the distribution.

There are important restrictions on how to transfer funds from your IRA for a QCD or to establish charitable gift annuities. Contact your financial advisor and the UMW Office of Gift Planning at jclarke@umw.edu or 540-654-2064  for information.