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Consider a Charitable IRA Gift

| September 12, 2018
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Wondering what to do with your annual IRA Required Minimum Distribution? If you can live without the income (and taxes) that a large Required Minimum Distribution (RMD) generates, think about taking a Qualified Charitable Distribution (QCD) from your traditional Individual Retirement Account (IRA) to satisfy your Required Minimum Distribution requirement.

If you are a traditional IRA owner aged 70½ or older, you can gift up to $100,000 a year to a qualified charity this way. The donation must be a direct transfer of assets-it cannot pass through your hands.[1]

What are the tax advantages of a QCD? You can exclude the amount of the gift from your adjusted gross income for the year in which you make the donation. Depending on your situation, this may also help you avoid taxation of your Social Security benefits or the Medicare surtax. Since a QCD is not a deduction, even taxpayers who don’t itemize can benefit from one.1,[2]

Does the income from your annual IRA Required Minimum Distribution risk putting you into a higher tax bracket? Imagine being able to lower your adjusted gross income by up to $100,000 a year while also helping a charity. By the way, that $100,000 annual QCD limit is an individual limit. A married couple can donate up to $200,000 in a year via QCDs while meeting some or all of their Required Minimum Distribution requirements.[3]

You may want to plan a QCD well before the December 31 deadline. Call or email me to explore this possibility now-it may provide you with a substantial federal tax break.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Sources/Disclaimers:

This material was prepared for Lisa Emling and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.

[1] CNBC.com, “Now you can donate to charity through your IRA” (November 28, 2016)

[2] Forbes.com, “The ABCs Of Using Your Retirement Account For Charitable Giving” (May 17, 2017)

[3] Forbes.com, “Why Retirees Need To Stop Writing Checks To Charities” (January 20, 2016)

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