Jun 30, 2021, 1:58:32 PM CDT
Giving Through Your IRA
When you give directly to Children’s Health and other qualified 501(c)(3) charities from your IRA, the money does not count in your ordinary taxable income, unlike regular withdrawals. This is called a Qualified Charitable Distribution (QCD). Added benefits of a QCD include reducing your taxable income, as well as lower the impact to certain tax credits and deductions such as Social Security and Medicare.
If you are over 70.5 years old and subject to a Required Minimum Distribution (RMD) on your IRA, you can give to a charity directly and leverage your retirement nest egg for some great tax savings while helping your community.
To help you become savvy in IRA deductions, follow these simple steps:
- Plan early in the year for how you will give charitably. New tax laws only offer the tax-free benefit to the QCD when it is given within the annual RMD. If you withdraw more than this amount to spend and then give charitably, it will be counted as ordinary income
- Give directly to the charity. Taking a withdrawal and then giving directly to the charity causes the funds to be counted in your regular income. Direct disbursements can be made through your fund manager or at www.childrens.com/ira.
- Know the amounts. You can give up to $100,000 annually per person using the QCD. This allows for $200,000 per married couple
- Make the most of the benefits. If you are still working and contributing to an IRA, give from an established account while giving to a new account to maximize tax benefits
- Consider your options. The QCD can be exchanged to create life income gifts such as Charitable Gift Annuities (CGA)
- Streamline your giving. You can set up recurring monthly gifts to allow for less management
- Create a legacy gift. IRAs allow for beneficiary designations to charities. Children’s Health can help you plan your legacy gift using your IRA for further tax advantaged giving for you and your loved ones
You have saved wisely all your life. Why not continue to expand those benefits now?
Quesitons? For more information, call Nicola Lawrence, Director, Legacy and Gift Planning at 469-744-1986.
This information is not intended as tax, legal or financial advice. Gift results may vary. Consult your personal financial advisor for information specific to your situation.