JAVS Spring 2023

Development Corner

Development Corner

“I.R.S., I.R.A., R.M.D., Q.C.D.—Oh My” by Tom Tatton

Time seems to waltz by at an allegretto speed! Are you approaching retirement or already in those “Golden Years?” If so, you face multiple options with regards to handling your accumulated assets. The questions first echo at a distant pianissimo and grow louder by the year; the decisions you make are important and greatly affect your family, the organizations, and the institutions you care about, and ultimately, your legacy. When you reach age 73, you will be faced with the government’s insistence that you take a Required Minimum Distribution ( “RMD”) from all types of IRA’s, (except a “Roth”), and the 403b or 401k plans left with your employer that you have accumulated for retirement. 1 It’s the government’s way of collecting the tax that you have so skillfully avoided all these years. There is a plethora of information available on RMD’s: most custodial firms—brokerage houses, banks, etc.—are more than happy, even obliged, to remind you of your RMD obligation, and then assist you in calculating the required withdrawal. If you want to donate all or part of your annual RMD to a charitable organization, you can make a “Qualified Charitable Distribution (“QCD”) directly from your IRA to the organization. Here are two options that may be “smart moves” for you: Option I: Make a QCD via direct transfer from an IRA. Making a direct gift from your IRA to your house of worship or any other IRS qualified charity including the American Viola Society may be a “smart move” to consider. • Easy and convenient • Counts toward your RMD

Here is what you need to know: • You must be age 73 or older at the time of your gift • The transfer must go directly from your IRA to the qualified charity • Your total gift cannot exceed $100,000 • You must not receive anything of value in return. Option II: One of our craftier AVS elders shared this strategy with our development committee: he assured us that he had checked with his advisors and this approach was approved. We will put his story in quotations as we are paraphrasing his description. This is not a recommendation but merely a sharing of his strategy: “A year or so before I turned [of age], I was uninformed of this RMD requirement and given some information. Reading as much as was easily available I determined that if I had an IRA that spun off dividends and I donated those dividends to approved charities, that would help ease the RMD withdrawal pain. I went to my local Schwab branch where I hold a medium sized IRA and asked for some assistance. Taking that advice, I adjusted the holdings in that particular IRA into dividend producing ETF’s and stocks. When I was required to take the RMD, I simply wrote checks, provided by Schwab, to my selected IRS qualified charities from the accumulated cash dividends. The dividends I donate satisfy of about 1/3 of my required RMD, they are tax-free, and I don’t have to sell any portion of the invested ETF’s or stocks. The funds selected are touted as well-established, high yielding, and below average risk. And, the stocks are solid, increasing dividend payers over many years. So, whether the stock market rises or falls is of little concern—I still receive the dividends necessary to donate tax-free and fulfill, in part, my RMD requirement.

• Not included in your gross taxable income • No need to itemize deductions to reap the tax benefit

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Journal of the American Viola Society / Vol. 39, No. 1, Spring 2023