Hi.

I’m Johnny Alexander, Treasurer of Pedals for Progress. Dave and I were Peace Corps volunteers and roommates in Sucua, Ecuador, for all of 1979. He often tells the story of our Peace Corps landlord who put to productive advantage one of the few bicycles in Ecuador. Sr. Peña was part of the inspiration for the founding of P4P.

Several years ago I joined the Board of Trustees and was elected treasurer. My wife Jane Divinski and I are long-time donors. I am starting this column to offer more financial insight and transparency to P4P.

You donors, volunteers, and stakeholders are the core of P4P. It is your time and treasure that sustain and power P4P. Because P4P operates as an IRS-qualified 501(c)(3) nonprofit, your donations may be used to reduce your tax payments.

I want to lead off my first column with an innovative and tax-saving way for retirees to donate to P4P. If you have an IRA or a 401k plan, this should be of interest to you. At age 70.5, you must begin to take Required Minimum Distributions (RMDs). You of course may begin your distributions earlier if you need or wish to. All IRA/401k distributions, except those in Roth accounts, increase your taxable income. The IRS will permit you to direct your IRA/401k administrator to make directed donations to 501(c)(3) nonprofits like P4P. The benefit is that if the money goes directly from your IRA/401k to a nonprofit, you avoid including it in your taxable income. Many wealthier seniors dislike the RMD because it can push them into a higher tax bracket and raise their taxes. The direct donation approach prevents this tax bracket creep. The outcome is that your total tax is lowered by a greater amount than if you report the income and take the deduction for your donation. If you wish to read more, here is a really good article, with examples, from the Wall Street Journal: The Benefit of Donating Your Required IRA Distributions to Charity.

I am sure that your tax advisor and financial institution can help you understand how advantageous this can be for you, given your financial situation.

In peace,