Since the Congregational Meeting on November 12, there have been a number of questions from members on how to make a QCD to the Capital Campaign using an RMD from an IRA. This alphabet soup really can be deciphered, so let’s start with defining the acronyms.
IRA – Individual Retirement Account
QCD – Qualified Charitable Distribution
RMD – Required Minimum Distribution
To put all this into context, individuals who hold a Traditional Individual Retirement Account (IRA) are required once they reach a certain age to take a government specified amount of money out of their IRA account annually. This withdrawal is referred to as a Required Minimum Distribution (RMD). Since most IRA accounts contain some, if not all, funds that were invested tax-free, an RMD can raise an individuals taxable income, sometimes significantly, resulting in higher federal and state taxes. To reduce this tax burden, the US Government allows a charitable donation made directly from an IRA to a qualified charity to count as part or all of an individual’s RMD. Such a donation called a Qualified Charitable Distribution (QCD) is not counted as income to the owner of the IRA. Thus the donor’s taxes are reduced over what they would be if the entire RMD were counted as income.
In summary, if an individual is of an age such that he must take an RMD annually and the individual is planning to donate money to charity, it may make fiscal sense to donate from an RMD rather than from regular income.
There are strict rules that must be followed, so individuals must talk to their IRA managers to be certain they meet all requirements and abide by all rules. One of the most important rules is that the money donated from an RMD must be distributed directly to a charity; it cannot be paid to the donor (IRA owner) and then given to the charity.
Our Fellowship is a qualified charity and has been receiving pledge payments made from member’s RMD’s for at least the past year. We know that you will need our address which I have listed below. In addition, we would ask that you have the IRA custodian indicate on the memo line or include information along with the check that indicates the purpose of the donation, such as “Capital Campaign” or “pledge payment”, if possible. In addition, we recommend that you notify the office to expect the check from your IRA custodian and also let the office know the purpose of the donation. Checks can be made payable and sent to:
Boulder Valley Unitarian Universalist Fellowship
1241 Ceres Drive
Lafayette, CO 80026
If your IRA custodian or you wish to wire funds to the BVUUF Capital Campaign, please contact Larry Sherwood or me for the information necessary to complete the wire transfer.
I wish you a Happy Thanksgiving and thank you for your generosity!