A Required Minimum Distribution (RMD) refers to the minimum amount that must be withdrawn annually from retirement accounts such as traditional IRAs, 401(k)s, 403(b)s, and other qualified retirement plans, starting in the year the account holder turns 73 (or 70½ if they turned that age before January 1, 2020). The purpose of RMDs is to ensure that individuals don’t defer taxes on their retirement savings indefinitely.

The change from 72 to 73 reflects the updated age requirement starting in 2023 under the SECURE 2.0 Act.

RMDs ensure that the IRS collects tax revenue on retirement savings that have benefited from tax-deferred growth. Since most retirement accounts, like 403(b)s, 401(k)s, and Traditional IRAs, allow contributions to grow tax-free until withdrawal, RMDs ensure taxes are eventually paid.

Benefits of Qualified Charitable Distributions (QCDs)

  • Tax-Free Donations: QCDs allow individuals aged 70½ or older to donate up to $100,000 annually tax-free from their IRAs to qualified charities.
  • Reduction of Taxable Income: Since QCDs are excluded from taxable income, they can help lower overall tax liability.
  • Satisfying RMDs: For those required to take RMDs, QCDs can fulfill part or all of the RMD requirement without increasing taxable income.
  • Benefitting Charitable Organizations: QCDs provide significant support to charities.

Still, have questions?
Contact Pro Advisor Support to answer your questions.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101
Fax: (888) 876.5101

<  Back

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

REQUEST INFORMATION

If you would like to learn more about our tax services designed for clergy or payroll, bookkeeping or HR designed for churches, please complete the request form to have an advisor contact you.

Click Here
Sign Me Up

Sign up here to be notified of new services, products or promotions from Clergy Financial Resources.