Donating IRA Assets to St. Andrew's
Turn your required distributions into charitable donations
IRS rules mandate that individuals age 70 ½ and older take RMDs (Required Minimum Distributions) from their IRA each year, regardless of whether the income is needed. These annual withdrawals are subject to ordinary income taxes. By making a contribution from your IRA to the church or other charity, you can satisfy your RMD amount without reporting additional income.
This provision may be especially attractive to retirees who don’t need all the income from their IRA to meet current living expenses. Bu donating the money to a charity, you can enjoy the satisfaction of knowing that you are contributing to a worthy cause while effectively lowering your tax bill.
How it works
The provision allows retirees age 70 ½ and older to donate up to $100,000 tax free from their IRA each year. Generally, when you take a distribution from your IRA, it is treated as taxable income. Under this provision, made permanent in the 2015 federal spending and tax package, those assets are excluded from income if the distribution is made directly to charity.
The distribution is not included in your income so you avoid the potential negative consequences that regular IRA withdrawals in retirement can create, including taxes on Social Security benefits. Normally, charitable contribution deductions are limited or are eliminated altogether for taxpayers who do not itemize deductions.
Talk to your financial advisor
It is important to consider your tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to work closely with your financial advisor to determine whether this tax provision is right for you.
This information is not meant as tax or legal advice. Tax laws are complex and subject to change. Please consult a professional tax advisor to determine how this tax law affects your situation.
IRS rules mandate that individuals age 70 ½ and older take RMDs (Required Minimum Distributions) from their IRA each year, regardless of whether the income is needed. These annual withdrawals are subject to ordinary income taxes. By making a contribution from your IRA to the church or other charity, you can satisfy your RMD amount without reporting additional income.
This provision may be especially attractive to retirees who don’t need all the income from their IRA to meet current living expenses. Bu donating the money to a charity, you can enjoy the satisfaction of knowing that you are contributing to a worthy cause while effectively lowering your tax bill.
How it works
The provision allows retirees age 70 ½ and older to donate up to $100,000 tax free from their IRA each year. Generally, when you take a distribution from your IRA, it is treated as taxable income. Under this provision, made permanent in the 2015 federal spending and tax package, those assets are excluded from income if the distribution is made directly to charity.
The distribution is not included in your income so you avoid the potential negative consequences that regular IRA withdrawals in retirement can create, including taxes on Social Security benefits. Normally, charitable contribution deductions are limited or are eliminated altogether for taxpayers who do not itemize deductions.
Talk to your financial advisor
It is important to consider your tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to work closely with your financial advisor to determine whether this tax provision is right for you.
This information is not meant as tax or legal advice. Tax laws are complex and subject to change. Please consult a professional tax advisor to determine how this tax law affects your situation.
