If you have an Individual Retirement Account (IRA) in the USA and are required to take a Required Minimum Distribution (RMD) from it each year, you may want to consider using part of your Required Minimum Distribution to pay your pledge or to make a special donation to Lake Chapala Unitarian Universalist Fund, Inc. (LCUUF, Inc.)

You can do this by taking a Qualified Charitable Distribution (QCD) from your IRA and paying the funds directly to LCUUF, Inc. which is a 501(c)(3) charitable organization in the USA.

The advantage of a Qualified Charitable Distribution is:

The withdrawal from your IRA counts as part of your Required Minimum Distribution, but it does not count as taxable income to you.

This can be more tax efficient than withdrawing your Required Minimum Distribution, counting it as taxable income, and then paying your pledge or making a charitable donation to LCUUF, Inc., especially if you take the standard deduction. As you get older, the amount of your Required Minimum Distribution gets larger, so a Qualified Charitable Distribution becomes more valuable.

If you are considering doing this, you must:

1. Talk to the financial institution which holds your IRA and find out their procedures for making a Qualified Charitable Distribution. Some financial institutions will only mail a paper check, made out to the charitable organization, and mailed to the address on the IRA account. Some will do an electronic transfer. Some people have paper checks for their IRA and can write a check directly to the charitable organization.
2. Talk to your tax preparer in advance to ensure that this is beneficial for your tax situation and that your tax preparer knows how to treat a Qualified Charitable Distribution on your tax return. There is no specific tax document which the financial institution will issue for a Qualified Charitable Distribution. You will get a 1099-R that indicates the withdrawal is taxable. It is up to your tax preparer to adjust the entry on your tax return so that the withdrawal is treated as a Qualified Charitable Distribution and is, therefore, non-taxable income.
3. Contact Susan Miller, Treasurer of LCUUF, Inc. at lcuufinc@LakeChapalaUU.org for the bank account details or to discuss getting your paper check deposited in LCUUF, Inc.’s bank in the USA.