Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 73. The RMD is calculated by dividing the prior December 31 balance of the account by a life expectancy factor from IRS Publication 590-B. If you have more than one IRA, you can total the required distributions for all IRA accounts and satisfy the requirement by taking distributions from any one or more of the accounts. However, RMDs cannot be rolled over into another retirement account. The Penalty for Missing an RMD Failing to take a required minimum distribution can result in a 25% excise tax on the amount that should have been distributed but was not. If corrected promptly, the penalty may be reduced to 10%. This makes timely RMD management essential. Strategies to Minimize Future Taxes 1. Qualified Charitable Distributions (QCDs)If you are 70½ or older, you can make a gift directly from your IRA to a qualified charity. The distribution is not taxable, and if you are required to take minimum distributions, it can satisfy all or part of that obligation. For a CFO of a 501(c)(4) organization, this strategy could be particularly valuable if you wish to support your own organization or other charities. 2. Roth ConversionsConverting traditional IRA funds to a Roth IRA before RMD age can reduce future taxable RMDs. Roth IRAs are not subject to RMDs during the owner’s lifetime, and qualified distributions are tax-free. The years between retirement and RMD age are often the optimal window for conversions. 3. Timing of DistributionsYou can take more than the minimum required amount, which may reduce future RMDs. Additionally, managing the timing of distributions can help you stay within lower tax brackets. 4. State Tax ConsiderationsFor Virginia residents, retirement income is generally taxable at graduated rates. However, Virginia offers an age deduction of up to $12,000 per person for taxpayers aged 65 and older, subject to income phase-outs. The state also conforms to federal rules for RMDs. For DC residents, state withholding on IRA distributions is voluntary unless requesting a total distribution, in which case 10.75% is the minimum. Virginia requires a minimum withholding rate of 4.00% on distributions. How Nova Tax & Accounting Can Help At Nova Tax & Accounting Services, we provide tax planning services that help individuals and business owners integrate RMD planning with their broader financial goals. Our team can help you evaluate Roth conversion opportunities, QCD strategies, and timing of distributions to minimize your lifetime tax burden. Visit https://novataxservices.com/ to schedule a consultation. Resources: IRS RMD FAQs IRS Publication 590-B IRS QCD Information
Which Form Does Your 501(c)(4) File? As a 501(c)(4) social welfare organization, your annual IRS filing requirement depends on your gross receipts. For 2025, if your gross receipts are normally $50,000 or less, you may be eligible to file **Form 990-N (e-Postcard)**. If your gross receipts are between $50,000 and $200,000, and total assets are under $500,000, you may file Form 990-EZ. Organizations with higher revenues file the full Form 990. Given your 2024 gross revenues of $350,000, you likely need to file **Form 990** (or Form 990-EZ if your assets are under $500,000 and you meet other criteria). For 2025, since revenues were minimal, you may qualify for the e-Postcard or 990-EZ depending on your total assets. Key Filing Deadlines The filing deadline for Form 990 is the 15th day of the 5th month after your fiscal year ends. For calendar-year organizations, this is May 15. A six-month extension is available by filing Form 8868. Missing the deadline can result in penalties, and failing to file for three consecutive years will result in automatic revocation of your tax-exempt status. Virginia and DC State Filing Requirements Virginia: 501(c)(4) organizations that solicit charitable contributions in Virginia must register with the Virginia Department of Agriculture and Consumer Services (VDACS). The registration must be renewed annually within 5.5 months after the end of the fiscal year. However, organizations raising less than $5,000 annually may be exempt. Washington DC: For DC tax-exempt status, organizations must file Form FR-164 online at MyTax.DC.Gov. It’s important to note that IRS 501(c)(4) recognition does not automatically grant DC tax-exempt status. Additionally, if your organization has unrelated business income subject to tax under IRC Section 511, you must pay DC franchise taxes on that income. How Nova Tax & Accounting Can Help At Nova Tax & Accounting Services, we specialize in Form 990 preparation for tax-exempt organizations, including 501(c)(4) social welfare organizations. Our team ensures accurate, timely filings that reflect your mission and maintain compliance with IRS requirements. We also assist with state registration and compliance. Visit https://novataxservices.com/ to learn more. External Links: IRS Form 990 Series IRS Exempt Organizations
Understanding the Compilation Service For a small 501(c)(4) organization like yours—generating $350,000 in gross revenues with minimal expenses—a compiled financial statement may be the most cost-effective option for meeting your reporting needs. A compilation is the most basic level of financial statement service. In a compilation engagement, a CPA takes the financial information provided by management and assembles it into formal financial statements. However, the CPA performs no verification, testing, or inquiry work to confirm the accuracy of the information. Because there is no verification, a compilation provides no assurance that the financial statements are free from material misstatement. It is often the right fit for organizations that need formal statements for internal use, grant applications, or simple reporting requirements where external scrutiny is not expected. For a new organization with straightforward finances, a compilation can provide the professional presentation you need without the cost of a review or audit. Why Your 501(c)(4) Might Need a Compilation As a CFO, you may be asked to provide financial statements to your board, donors, or grantors. Even if no one has explicitly required an audit or review, having professionally compiled statements demonstrates financial responsibility and transparency. This can be particularly important for a new organization seeking to build credibility with funders. It’s important to understand that IRS recognition of your 501(c)(4) status does not automatically require a compilation or audit. The IRS does not mandate these services for tax-exempt organizations at the federal level. However, state laws or funder requirements may create an obligation. In Virginia, for example, nonprofits with gross annual revenue of $750,000 or more must provide a financial review performed by an independent CPA when applying for or maintaining certain sales tax exemptions. For organizations below that threshold, no state-mandated review or audit is required. Finding the Right CPA Firm Since you are comparing firms for the lowest fee, here are practical tips: Ask about fixed-fee pricing. Many CPA firms offer flat-rate pricing for compilations, which provides predictable costs without hourly billing surprises. Understand what is included. A compilation engagement typically includes preparing the financial statements (balance sheet, income statement, and cash flow statement) and a compilation report that clearly states no assurance is provided. Additional services like bookkeeping or general ledger preparation may be available for an additional fee. Consider the long-term relationship. The CPA who prepares your compilation can also help with tax filing and future planning needs, potentially saving you time and money by working with a single firm. How Nova Tax & Accounting Can Help At Nova Tax & Accounting Services, we provide affordable compilation services for nonprofits and small organizations. Our team can prepare clean, professionally formatted financial statements from your financial records. We also offer bookkeeping and accounting services to help you organize your records before the compilation. For more information, visit https://novataxservices.com/ or schedule a free consultation. External Links: IRS Charities and Nonprofits IRS Form 990-N (e-Postcard)
