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Give Smart: Use Your RMD to Support Students

on February 27, 2020 in General by Truman Heartland Community Foundation

Changes to retirement assets under the new SECURE Act have many retirees looking for ways to lower their taxable income while fulfilling their IRA Required Minimum Distribution (RMD).

For many, pushing back the RMD starting age to 72 years of age is both a blessing and a curse. It provides an additional year and a half to contribute to an IRA so that investments appreciate; however, higher IRA balances will mean higher RMDs and more taxes.

A scholarship fund is an easy and effective way to fulfill your RMD, lower your taxable income and make a long-term impact in the community.

This option allows you to transfer your IRA distribution directly to a new or established scholarship fund as an IRA Qualified Charitable Distribution (QCD). As a QCD, the distribution is excluded from your taxable income and can be used for good.

In 2017, Dr. Mike and Mary Jo (Jody) Watkins, both retired educators, used their RMDs to establish the Watkins Family Harbinger Scholarship fund. This process helps them fulfill their RMD, lower their taxable income and continue to support first-generation college students graduating from Raytown School District high schools.

“It’s an easy process,” says Mike. “Sending the RMD directly to the Foundation helps us take full-advantage of the tax savings and continue to make a difference, one student at a time.”

Please note Truman Heartland does not offer accounting or legal advice.
Taxpayers who turned 70½ in 2019 are subject to RMDs but donors who turn 70½ after January 1, 2020 are not subject to RMDs until they turn 72. IRA Qualified Charitable Distribution gifts do not qualify for a charitable deduction. The transfer works for IRAs but not for other retirement accounts.

Interested in Using Your RMD for Good?

Download our RMD Guide and discuss this strategy with your professional advisor or make an appointment to meet one-on-one with Cole Eason to learn more about ways to give with Truman Heartland.