Charitable Donations and Your Retirement Account

/ March 1, 2024

RARE, like most non-profit organizations, benefits from individual donors’ financial gifts. It is well known that most donors may receive a tax benefit from supporting those organizations. Expanded tax rules incentivize increased gifting –  benefitting both donors and charitable organizations.

Depending upon one’s birth year, at the age of either 72 or 73 it becomes mandatory to begin taking “Required Minimum Distributions” (RMD’s) each year from retirement accounts (IRA’s, 401K’s, 403B’s, and others). These distributions can simultaneously benefit charitable organizations and the account owner.

If the distribution goes directly to the owner of the account, which is typical, it is fully taxable. However, if the distribution is donated directly to a charitable organization (like RARE) it is not taxed at all! Donating some or all of those dollars directly to a charity means the account owner has less income and consequently less income tax than if they took that distribution themselves.

Something to think about as one considers making charitable contributions in the era of taking RMD’s!

Regardless of tax benefits, when donating to charitable organizations, we do so because we truly believe that our gifts support the mission and the good work of the entity. We believe there is a real benefit to those impacted by our contributions. Learn more about donating to RARE.

Know that RARE’s leadership offers deep gratitude for your donations.

Please consult your tax advisor for specific guidance.