Use your RMD for charitable purposes
If you’re taking your required minimum distribution (RMD) from your IRA, you have a unique charitable option: a qualified charitable distribution (QCD).
Making a QCD can be a great strategy if you’re charitably minded and don’t need your full RMD. Keep in mind that your QCD must be:
- Given directly to an operating charity designated as qualified by the IRS.
- Made by December 31, 2017, if you want to claim the deduction on your 2017 taxes.
- No more than $100,000.
Donor-advised funds make giving easier
If you’re not sure which charities to give to right now, consider a donor-advised fund like the one offered through Vanguard Charitable. Donor-advised funds let you take a tax deduction in the year of your contribution, while providing you the flexibility to create a strategic plan for granting over time.*
Here’s how a donor-advised fund works. You:
- Contribute a lump sum to your fund now using appreciated assets or cash, and deduct a percentage of your adjusted gross income on your 2017 tax return.
- Choose an investment strategy for your account, and enjoy tax-free growth on charitable assets, allowing you to grant even more to your favorite charities over time.
- Can use your fund at any time to support your favorite causes by making grant recommendations. You can also make incremental grants now while saving to make a larger, more impactful grant in the future.
- Can create a succession plan for your account to help continue your family legacy.
If you already have a donor-advised fund, review your granting strategy to ensure you’re maximizing all the benefits the fund has to offer.
Interested in a donor-advised fund?
If you’re interested in opening a new donor-advised account, you can establish one through Vanguard Charitable with as little as $25,000—far less than you’d need to establish a private foundation. You can invest in low-cost Vanguard funds or other options, and there are no setup costs.
Get started now before the year ends
“Philanthropy can be fulfilling,” said Dennis Duffy, principal of Vanguard Flagship Select Services®. “You’ll not only reduce your tax burden now, but you’ll make a difference in the lives of others for many years—even generations—to come.”
*Donor-advised funds, such as the one offered by Vanguard Charitable, are ineligible to accept RMDs. Distributions must first be claimed as income and can then be offset by donating to a donor-advised account. One option is to donate your RMD to Vanguard Charitable’s Sustainable Disaster-Relief Fund (SDRF), which supports communities recovering from natural disasters. The SDRF is a field-of-interest fund (targeted for a specific need), not a donor-advised fund, so it’s eligible to receive QCDs.
All investing is subject to risk, including the possible loss of the money you invest.
The information provided here is for educational purposes only and isn’t intended to be construed as legal or tax advice. We recommend that you consult a tax or financial advisor about your individual situation.
Consider the impact on your long-term investment strategy when making any gifts for tax purposes.
Vanguard Charitable was founded by The Vanguard Group, Inc., as an independent, nonprofit, public charity in 1997. Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard.