Good News for Taxpayers over the age of 70 ½!
Congress voted, in 2015, to make permanent the exclusion from income of up to $100,000 per person, per year, for Individual Retirement Account (IRA) distributions which are given directly to charities.
The requirements are relatively simple. The charitable distribution must be:
- From a traditional IRA or a Roth IRA
- Direct from the IRA trustee to the charitable organization-with no intervening possession or ownership by the IRA owner
- On or after the IRA owner has reached age 70 ½
- A contribution to an organization that would qualify as a charitable organization under Sec. 170 (b) (a), other than a private foundation or donor advised fund
One of the key benefits of the direct charitable contribution from your IRA is that the distribution counts towards your Required Minimum Distribution (RMD). You can contribute more than your RMD as long as you do not exceed $100,000 in a calendar year.
It is also less likely that Social Security will be taxable: an increase in an individual’s AGI because of a RMD, may make more of their social security benefits, taxable. Since direct distributions from your IRA to charity are not included in income; your social security income may be taxed at a lower rate.
For more information on this, and other tax saving strategies; contact:
Bob Lange, ChFC, CAP at [email protected] or 608-798-4453 Ext. 221