Starting at age 73, the IRS says Individual Retirement Account (IRA) owners must take annual income withdrawals, known as required minimum distributions (RMDs). If you don’t take these withdrawals, you could be subject to steep financial penalties. So what if you don’t particularly need the extra income, don’t want to increase your taxes this year, and want to make an impact on the arts in your community?
Linda Levy and Stephen King, longtime supporters of Arts Council Santa Cruz County, recently faced this dilemma. “My wife and I are approaching our mid-70s. At this time in our lives, the U.S. federal tax code says that we must take an ever-increasing amount of money out of our IRAs. As each year goes by, and the RMD increases, it can greatly affect your taxes,” Stephen and Linda explain. “One way to counteract this potential tax burden is to use the excess required minimum distribution money as a charitable contribution, called a Qualified Charitable Distribution (QCD).”
The result is a win-win: Your IRA assets go directly to the cause you support, so you don’t report QCDs as taxable income (even if you do not itemize deductions). And, the causes closest to your heart get the support they need.
So how do you begin? By contacting your IRA administrator as soon as possible. “Our IRA administrator says they typically approach this in early November to ensure that the monies are distributed in a timely manner,” say Linda and Stephen. “Arts Council Santa Cruz County is one of our target charities for a Qualified Charitable Distribution.”
You’ll need the following information when you speak with your IRA administrator:
Legal name of charity: Arts Council Santa Cruz County
Charity's tax ID: 94-2600140
Charity's mailing address: 1070 River St., Santa Cruz, CA 95060
Contact person for charity: Ami Davis, Development Director / (831) 475-9600 x 12 / ami@artscouncilsc.org
To count towards your 2023 RMD, the QCD must come out of your IRA by December 31, 2023. If all of these acronyms have your head spinning, or you just want to talk with someone about your options, call Ami Davis, Development Director, at (831) 475-9600 x 12, or email ami@artscouncilsc.org. Your IRA has given you security during your retirement; let it secure a vibrant community of arts and culture for future generations in Santa Cruz County.