Nov 26, 2019
by Don Graffius, President
Whether or not you are actually retired, when you turn 70½ you typically must begin taking required minimum distributions (RMDs) each year from your tax deferred retirement accounts (IRAs, 401(k)s). This additional income will be taxable and could push you into a higher tax bracket or trigger higher taxes on your Social Security benefits and/or result in a Medicare high-income surcharge.
You could avoid these additional taxes with a charitable gift to a Seventh Day Baptist ministry! However, be sure to do it in the most tax efficient way! Folks who take an RMD and then use it to make a gift to ministry may not be able to deduct it on their income taxes, especially if they opt to take the new, higher standard deduction.
Instead, take what’s known as a qualified charitable distribution (QCD) to give up to $100,000 annually to charities. QCDs are available only to owners of traditional IRAs who are age 70½ or older.
You direct your IRA custodian to send a partial or full contribution directly to the SDB Conference, Memorial Board, Missionary Society, or a church. The distribution still counts toward your RMD for the year, but the amount is not included in your adjusted gross income. That gives you a chance to receive a tax benefit for your charitable gift even if you do not itemize!
Another tax-saving idea to consider is a gift of appreciated personal property such as shares of a mutual fund or stock. Instead of paying capital gains on that appreciated stock (such as Amazon), when it is sold, give it to your favorite SDB ministry and receive a charitable income tax deduction for its fair market value on the date of the gift and avoid all that capital gains tax. The SDB Memorial Fund also accepts gifts of appreciated real estate.
Prayerfully consider these giving opportunities and discuss them with your financial advisor or tax professional. We will gladly work with your financial professional to transform your gift into SDB ministry.
