You cannot keep money in your employer-sponsored retirement plan(s) indefinitely. Once you reach age 72, you will need to withdraw money from these funds annually. This is a great opportunity to begin or grow your philanthropic giving. If you are the account owner of one of these types of accounts and you have reached age 72 (73 if you reach age 72 after Dec. 31, 2022), you have a Required Minimum Distribution (RMD).
The RMD is the smallest amount account holders must withdraw from employer-sponsored retirement plans each year once they reach age 72. If you fail to meet your RMD, the amount not withdrawn will be taxed at 50%. If you have an RMD on your own account or an inherited account and you do not need the funds, donating to a charity (Old St. Mary’s) is a great option. Your required withdrawal will be included in your taxable income and cannot be rolled into other tax-deferred accounts. However, donating your RMD is a qualified charitable distribution (QCD).
Up to $100,000 of your distribution from an employer-sponsored retirement account (including but not limited to your RMD) is a QCD. Make your donation by December 31 to qualify this year.