Minimize Your Taxes and Maximize Your Impact

John and Mary Robbins and their dog Ruby

Like many people approaching retirement, John and Mary Robbins met with their financial advisor to discuss the future. John, an internal medicine specialist with Bozeman Health, retired last April and Mary is a retired nurse. One of the topics they discussed with their advisor was charitable giving.

The Robbins have been longtime supporters of many local nonprofits, including GVLT. John, Mary, and their dog, Ruby, spend significant time on the local trails hiking, skiing, and mountain biking.

“If you avail yourself of the trails,” John says, “we think you should give back.”

As two medical professionals, John and Mary also believe “it’s important to get outside and enjoy the trails for physical, emotional, and spiritual health.”

Mary and John were looking for a way to make a greater impact on the organizations with missions that most closely aligned with their values. That’s when they learned about individual retirement account (IRA) qualified charitable distributions (QCDs).

“Like me, I think a lot of people my age, especially those facing IRA required minimum distributions, don’t know about qualified charitable distributions,” said John.

The Robbins learned that individuals aged 70 ½ years or older may use a QCD to donate up to $105,000 annually to one or more qualified charities, such as GVLT, directly from a taxable IRA. There are several potential advantages including:

  • Maximize your charitable impact: While income tax is normally due on each traditional IRA distribution, an account owner does not need to pay taxes on an amount transferred directly to a qualified charity. This enables you to donate the full amount that you withdraw rather than what’s left after you pay the individual income tax due on the funds you withdrew.
  • Lower your taxable income: A QCD excludes the amount donated from your taxable income. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.
  • Reduce your Required Minimum Distributions (RMDs): If certain conditions are met, QCDs can count toward the required minimum distributions (RMDs) that people who are age 73 or older must meet each year if they have traditional IRAs. Taking RMDs increases your taxable income, which can push you into a higher tax bracket. Using QCDs can fulfill all or part of your RMD requirement without increasing your taxable income.

While this may sound complicated, John describes the process as simple.

“It was a painless procedure. We met with our financial advisor, and it was accomplished very easily.”

“We are truly grateful for John and Mary’s commitment to GVLT,” says GVLT Director of Development Justin Barth. “Their qualified charitable distribution gifts do make a great impact and help us advance our mission of Trails and Conservation.”

Contact Justin Barth to learn more about ways you can support GVLT.

This information should not be construed as tax advice. Always consult with a tax professional regarding your specific tax situation.