Those with an IRA who have reached age 70½ are familiar with the required minimum distributions (RMDs) — the amount that must be withdrawn annually based on the owner’s age and the account value as of December 31 of the prior year. And, those withdrawals are subject to tax at ordinary income rates — as high as 37%.
Some choose to spread out their distributions throughout the year, much like receiving a regular “paycheck” from the IRA. Others who don’t immediately need the money prefer to postpone the distribution until the end of the year, giving their funds more time to grow tax-deferred.
Many friends of Cal Farley’s have discovered that their RMDs are a tax-wise way to support us. If you have reached age 70½, you can have the custodian of the account send a qualified charitable distribution directly to Cal Farley’s and other charities, tax-free. Up to $100,000 can be given annually. The tax savings come when the distributions take the place of required withdrawals, for several reasons:
- You can avoid income tax you would otherwise pay, while satisfying your RMD, even though no charitable deduction is allowed.
- A distribution to Cal Farley’s results in lower adjusted gross income, which may help you avoid higher Medicare premiums.
- Some taxpayers may reduce the amount of Social Security subject to tax by lowering adjusted gross income.
- You can make a difference in the lives of children and families we serve today.
If you are interested in making an IRA gift to Cal Farley’s, ask your IRA custodian for a form to arrange for a qualified charitable distribution. Or, for more information, click here to contact us.
Year-end Giving Tips
- Complete all gifts by Dec. 31 to qualify for tax savings on your 2019 income tax return. Carefully timing your gifts can help you itemize deductions in some years.
- Save all receipts and acknowledgment letters, especially for gifts of $250 or more.
- Consider making gifts of securities that are worth more than you paid for them for greater tax benefits. Click now to learn more.
- Those age 70½ and older should check with advisors about the ability to make tax-free charitable gifts directly from a qualifying IRA. Click now to learn more.