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Let’s Get Excited about RMDs!

By Mary P. Walker, Petrus Blog Contributor & Local Charity Board Member

Let’s Get Excited about RMDs!

This may be the most boring blog post you’ll read this week, but slogging through it could bring a lot of money to your ministry!

2021 is shaping up to be a CRAZY tax year. Many of our benefactors have just recently filed their returns for 2020—with the deadline extended to October 15. WHEW! Now, you can help them and your ministry by gently reminding them that December 31 is only about two months away. That is the last day for tax favorable gifts in 2021. 

The funds for such a gift can come from a “required minimum distribution” (RMD) from a non-Roth IRA or other qualifying retirement plan account. 

Many people view their traditional IRAs as “nest eggs.” Even though they are old enough (at least 59 ½) to draw on these IRAs without penalty, they don’t, or draw just enough to meet expenses. However, when they reach age 72 (or 70 ½ before January 1, 2020), their age now triggers the REQUIREMENT to draw down the funds in a systematic way. Each year they must make a required minimum withdrawal. In other words, they must receive a “required minimum distribution,” or RMD, from their IRA. 

Disclaimer: I am not an accountant or lawyer. Anybody considering donating all or part of their RMD should consult their financial advisor for a complete understanding of the process, timing, and ramifications. BUT I DO KNOW about the transforming power of RMDs when they are donated to charitable organizations.


Here are some facts about RMDs from none other than the IRS:

  • You can’t keep retirement funds in your account indefinitely. Your required minimum distribution is the minimum amount you must withdraw from your account each year. You generally have to start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 72 (70 ½ if you reached that age before January 1, 2020). 
  • The required minimum you must take out of a traditional IRA in a given year (RMD) is calculated based on life expectancy and the amount in your account. The IRS provides a worksheet here to help you easily calculate this amount. 
  • If you would like to use these IRA funds to reduce your taxable income and support a charitable organization, the fund administrator must DIRECTLY send the money to the organization. You cannot receive the funds first.
  • These funds send directly from a traditional IRA to charity “count” toward the RMD, but do not count as taxable income. If you itemize, you cannot take this charitable gift as a deduction.
  • RMDs as donations are especially beneficial to those who do not itemize on their income taxes or who qualify for income-related benefits. The amount of the RMD that is donated DOES NOT count as taxable income if it goes DIRECTLY from the account to the charitable organization.


Please note: The requirement to take the RMD was suspended for 2020. This IS NOT the case for 2021 (this year). Not everybody knows this!


Let’s do a bit of simple math.

Assume a person is 75 years old and has $500,000 in a traditional IRA.

According to the IRA worksheet, their RMD would be almost $22,000! Imagine the impact if even half of this would be gifted to your ministry . . .! And, imagine the impact if you have two, three, five or ten potential benefactors in a similar situation!


Get the Word Out!

So, how can you get the word out to your potential benefactors? Some ideas:

  • Publicize this giving option in your newsletters and other general communication to your supporters. Let your potential benefactors know that this way of giving might work well for them. 
  • In face-to-face calls, bring the subject up with those in the right age group. They probably don’t know this is an option or have not associated this way of giving with your ministry.  
  • If your data allows you to identify retirees, consider a simple appeal letter RIGHT NOW. Let them know about RMDs in general, and give them the IRS website and the legal name and address of your ministry—so they can direct the administrator of their IRA where to send the gift. In other words, make it VERY easy for them to make a gift.
  • Follow up with two or three email reminders as the year winds to a close.
  • Repeat. If a potential benefactor has never considered using RMDs for gifts, the idea may take some getting used to. And, every year, more folks will turn 72. 



NOW is the time for your benefactors to plan their giving with the end of year tax advantages in mind. Using RMDs as gifts to your ministry can be a win/win!

What are you waiting for?


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