Catholic Diocese of Spokane, Washington



From the

Official News Magazine of the Diocese of Spokane

Eric Meisfjord, Editor
P.O. Box 1453, Spokane WA 99210
(509) 358-7340; FAX: (509) 358-7302


‘Required Minimum Distribution’ can be good news for non-profits and donors alike

by Dennis Hake, for the Inland Register

(From the July 21, 2016 edition of the Inland Register)

There is good news for “Baby Boomers” and for charity as it relates to the Required Minimum Distribution (RMD).

RMDs are mandatory, minimum yearly withdrawals that must be taken from tax-deferred retirement accounts beginning no later than April 1 following the calendar year in which the owner turns 70.5. In general terms, “boomers” are defined as persons born during the years 1946-1964. In 2016, this includes people who are between 52-70 years old. The amount of that withdrawal is determined through a simple calculation and the withdrawal is subject to federal tax.

This means that the first baby boomers will be required to withdraw funds from their individual retirement accounts, if they hadn’t started to do so already. What they, and those born before 1946, do with that money is important, has relevant tax implications, and provides an opportunity for them to provide financial assistance to their favorite charitable causes. For example, assuming that the funds from your IRA distribution are not needed in a given year to meet your household budget, you can eliminate paying tax on your distribution by directing all or part of your distribution up to $100,000 directly to a qualified charity. This is a terrific way to support the mission and services of your charity of choice, and your gift is tax deductible to the full amount that you direct to the charity. This is good financial news for both donors and for many non-profit organizations.

Gifting the IRA distribution to a charity is easily accomplished through the firm or broker managing the individual retirement account.

“Directing distribution funds to a qualified charity is an easy and creative way to support charitable causes and organizations, while minimizing income tax ‘exposure,’” says Mick Buller, Vice President and Relationship Manager in Washington Trust Bank’s Wealth Management and Advisory Services. “Further, the direct charitable distribution can be gifted in those years when a clients’ financial needs allow for charitable giving.” Discuss with a financial advisor as to the appropriate amount to consider gifting to a charity.

“Boomers” are the first generation to have actively participated in IRA-type or 401(k)-type plans, and many are just learning now about the requirement of taking a minimum distribution from their retirement plan. Directing all or part of that distribution to a charitable organization that supports the donor’s goals and values can be meaningful and have a positive impact on the organization and its mission.

As Dr. Rob McCann, Executive Director of Catholic Charities, a long-established charity in Eastern Washington Spokane, said, “we believe the RMD is a win, win, win. It fulfills a very human need to give to others, provides a solid financial benefit to the giver and our agency, and it directly benefits the people we serve.”

(This article was contributed by the Catholic Charities Foundation. For additional information on the Required Minimum Distribution or other ways to participate in planned giving, call Dennis Hake at the Foundation - (509) 358-4255 - or email dhake@ccspokane.org.)


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