Retirement & Eldercare

Take Advantage of the IRA-to-Charity Provision

Take Advantage of the IRA-to-Charity Provision

If you have invested in IRAs, once you have reached the age of 70 ½ you are required to take a minimum distribution each year. This is known as the RMD, or required minimum distribution. Though you may prefer not to deplete your principal, there are a number of ways that you can take the distribution and still make it work to your advantage, and one of these is to use the provision that allows you to transfer money from your IRA directly to a qualified charity. This provision was initially established temporarily, but has now been made permanent, and it allows up to $100,000 in IRA funds to be transferred to a charity. If you are a person who would already have been making large donations to charity, this provision offers you the opportunity for significant tax benefits for a number of reasons.

The newly permanent capability means that the distribution that is taken does not count towards income, though it does count towards the RMD for the year. Though it cannot be attributed specifically as a charitable contribution, it still provides a potentially sizable tax benefit because it lowers the adjusted gross income. This may mean that taxpayers who would have maxed out of tax breaks for passive losses, taxable Social Security Income, medical expenses and other write-offs may find themselves eligible to take advantage of those benefits. Those who do not itemize may still find themselves at an advantage because the reduction in AGI offsets the impact that the required IRA distribution would have had.

The availability of the charitable contribution transfer is just one way that you can minimize the impact of the required minimum distribution of your IRA. For more tax-saving ideas, seek professional advice.

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Gordon W. McNamee

Gordon W. McNamee

Gordon W. McNamee is a Certified Public Accountant (CPA) based in Rancho Cucamonga, CA. Gordon W. McNamee can assist you with your tax return preparation, payroll, accounting and tax planning needs. <br /> <br /> 2021 is Gordon W. McNamee, CPAs 38th year in the profession. As as a former IRS agent (1984 through 1987), Gordon has been in public accounting since 1987. Gordon specializes in individual, corporate, HOA, trust, estate and payroll taxes. He also prepares financial statements and provides accounting & bookkeeping services. He enjoys making his clients feel at ease while providing a personalized professional service.

GORDON W. MCNAMEE, CPA
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