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:
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:
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?