A way to give back without the tax burden

For many people, supporting causes we care about is important, but so is careful financial planning. For folks aged 73 and older who have an Individual Retirement Account (IRA), they must take Required Minimum Distributions (RMDs). But these mandatory distributions increase taxable income and can affect both social security taxation and Medicare calculations.

There’s a solution that enables individuals to support organizations such as Audubon Canyon Ranch, while helping to minimize the negative financial impact of RMDs. It’s called the IRA Qualified Charitable Distribution (QCD).

Longtime supporter Bill Finkelstein explains that QCDs offer a tax benefit distinct from cash donations. “The QCD is a great way to reduce a retiree’s income tax as it lowers the taxable portion of their IRA’s Required Minimum Distribution by 100% of the donated amount,” says Bill. “That’s unlike a cash donation, which retirees often can’t even partially deduct with today’s tax rules. A QCD is just a smart way to donate that won’t adversely affect disposable income.” (Note: Bill is a savvy retired investor and is not a CPA or tax professional.)

The problem: taxable RMDs and limited deductions for retirees

Bill’s experience highlights a common issue: most retired people who take an RMD don’t itemize deductions, which limits their ability to claim charitable contributions under current tax laws. Because RMDs are taxable, they contribute to taxable income that can, if large enough, move IRA owners into higher tax brackets.

Traditional donations from after-tax assets, like cash or a money market account, don’t have the same impact on reducing taxable income. This makes it challenging for retirees to contribute to the causes they love without a tax burden. 

The solution: IRA Qualified Charitable Distributions

With an IRA QCD, donors can transfer up to $105,000 in 2024 directly from their IRA to a nonprofit organization like Audubon Canyon Ranch without including the distribution in their taxable income. This tax-smart giving strategy helps donors meet their philanthropic goals and fulfill RMD requirements without increasing their taxable income.

Each and every QCD contribution — such as Bill’s — provides essential support for the Audubon Canyon Ranch mission.

A simple way to give

Making an IRA Qualified Charitable Distribution is straightforward.

1. Contact your IRA custodian: Inform them of your wish to make a Qualified Charitable Distribution to Audubon Canyon Ranch for the 2024 tax year.

2. Provide Audubon Canyon Ranch’s details including tax ID number (94-6069140). Instruct your IRA custodian to send and complete your QCD by December 31, 2024.

3. Verify receipt: Confirm with us that your QCD was received to ensure proper records.

By choosing a tax-smart IRA QCD, supporters such as Bill support our vision: a world where the diversity of life thrives, and nature benefits all.

Have questions? Contact Director of Philanthropy Jen Newman at 415-868-9244 Ext. 119 or [email protected].