A More Efficient Way to Give for Retirees | gatewaycwm

A More Efficient Way to Give for Retirees

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Late in 2015, Congress passed a bill regarding “Qualified Charitable Distributions” that is of great benefit to many retirees.  Here’s how it works:

If you’re age 70½ or older and own an IRA, you are familiar with the Required Minimum Distributions that must be taken from your account each year.  These distributions are almost always taxable and, in fact, that’s the whole idea.  According to the tax law, it’s time to start paying taxes on some of the money inside the IRA; money that has been tax-deferred for many years, perhaps even decades.

Unfortunately, many IRA owners also find out that increasing their taxable income by the amount of the IRA distribution may cause other taxes to increase.  It may push them into a higher tax bracket, or cause a higher percentage of their Social Security income to become taxable, or a number of other tax-increasing subtleties may occur.

But with the Qualified Charitable Distribution, required distributions from an IRA of up to $100,000 per year can now be sent directly from the IRA to one or more churches or charities of your choice (ex: The Gateway Center).  These distributions are not taxable to you and will not show up on your tax return.

The gift to charity will not show up on your tax return either.  But, with the 2017 changes to the tax law, most taxpayers will no longer be able to “itemize” their tax deductions and get a tax benefit from their charitable giving.

For many, perhaps most, IRA owners who are over age 70½ and also give to charity, this could provide an opportunity to give more easily and more tax-efficiently.

Can this law help you?  The answer is based on your unique circumstances so only you, your tax advisor, or your financial planner can determine its benefit.  But it will help many and – if you take the time to investigate – you may be delighted to find that you are one of the many who can give to your favorite causes more efficiently.

Submitted by Daniel L. Hardt, CFP®, Certified Kingdom Advisor®, Dan Hardt Financial Services.  Louisville, KY  (502) 893-4381.
Dan Hardt offers securities and investment advice through G.A. Repple & Company, a registered broker/dealer & investment advisor.  Member FINRA & SIPC.  101 Normandy Rd, Casselberry, FL  32707  (407) 339-9090