Making the most of your retirement giving

As we move into the final months of the year, many retirees are taking a closer look at their finances, particularly their Required Minimum Distributions (RMDs). If you are age 73 or older and have funds in an eligible IRA (Traditional, Rollover, or Inherited), the IRS requires you to withdraw a certain percentage from your tax-deferred retirement accounts each year. 

While many people rely on these withdrawals for living expenses, others find they don’t necessarily need the income. The catch? These distributions are subject to income tax. For those in higher tax brackets, the required withdrawals can create a significant tax burden.

But there’s good news. The IRS offers a unique option for charitable-minded retirees: the Qualified Charitable Distribution (QCD). 

What is a Qualified Charitable Distribution?

If you’re age 70½ or older, you can donate directly from your IRA to a qualified charity without paying any income tax on the gift. The distribution must be made directly from your IRA to an eligible 501(c)(3) charitable organization, with a maximum annual limit of $108,000 per individual and $216,000 for married couples filing jointly.

Instead of withdrawing the money yourself (and owing taxes on it), you can direct your financial institution to send the funds to the charity of your choice. Plus, with a QCD, the distribution does not get treated as income, reducing your risk of entering a higher tax bracket.

Here’s a real-world example for you:

Say your RMD is $25,000 and you’re in a 28% tax bracket. Normally, you’d owe about $7,000 in taxes on that withdrawal. But if you decide to donate $10,000 of your distribution to a charity using the QCD, the amount will go directly to the charity tax-free and you’ve decreased your tax burden by around $2,800 and you’ve supported a cause you care about.

It’s truly a win-win!

Other Smart Ways to Give

At Greater Green Bay Habitat for Humanity, we’ve been blessed by supporters who have found creative and meaningful ways to give:
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Stock donations – If you’ve invested in stocks that have gained significant value (think Procter & Gamble, Apple, or Microsoft), you can donate the stock directly to Habitat. You minimize your capital gains tax, become eligible for an immediate income tax deduction, and Habitat will receive the full value of your gift.

Legacy gifts – Recently, an anonymous supporter left Greater Green Bay Habitat for Humanity a perennial gift though naming us as a beneficiary on several of her accounts. This has fully funded an entire home in our Habitat Homestead development. In the future when this house is sold to a future homebuyer, we will be able to reinvest the proceeds over time and this gift will have the potential to fund up to five additional homes. Talk about the ripple effect of generosity!

Beneficiary designations – You can name Greater Green Bay Habitat for Humanity as a full or partial beneficiary on retirement accounts, investment funds, or insurance policies. Any change like this allows you to leave a lasting legacy without impacting your day-to-day finances.

Why Act Now?

Qualified Charitable Distributions must be completed by December 31. Because the funds need to be transferred directly from your IRA custodian to the charity (you cannot take the money yourself and then donate it), it’s important to allow enough time for processing. This is why many people use this season to meet with their financial advisors, update beneficiaries, and make decisions about their charitable giving. If you’ve ever thought about making an impact with your legacy, now is the perfect time to explore your options.

If the idea of charitable giving resonates with you, we encourage you to:

1. Talk with your financial advisor or tax professional. They can help you understand how these strategies fit into your overall financial plan.
   
   
2. Consider Habitat for Humanity of Greater Green Bay. Your generosity helps local families build strength, stability, and self-reliance through affordable homeownership.
   
   
3. Reach out to us. Our Philanthropy Director, Natalie Farmer, would be happy to discuss the many ways you can partner with us to leave a legacy of hope. You can reach out to her via email at [email protected].

At the heart of all charitable giving is this question:

How do you take what’s most important to you and pay it forward?
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For many of our supporters, the answer is clear; invest in homes, communities, and futures.