Many of us have had the satisfaction of watching the money in our IRAs grow, tax free, for years. But the day inevitably arrives when Uncle Sam knocks at the door with an outstretched palm. At age 72, you are subject to Required Minimum Distributions (RMDs)—forced withdrawals meant to subject your IRA funds to taxation. By transferring these funds to IJ, however, those gains on your hard-earned money will never be taxed.
“Wait a minute,” you say. “Congress suspended RMDs for 2020 as part of the CARES Act—is giving from my IRA still an option?” The answer is yes! You must resume RMDs in 2021, and you are eligible to make Qualified Charitable Distributions (QCDs) as soon as you turn 70½—before you are required to make RMDs at all. With a QCD, you can direct your plan administrator to transfer up to $100,000 per year from your IRA to IJ—tax free.
By reducing your IRA’s value now, you will reduce the RMD for future years, which may help reduce future taxes. You may also be saving your family potential estate tax liability. This option is especially savvy for those who already plan to give to charity. Take for example an individual with a tax rate of 24% who does not plan to itemize. A $10,000 gift directly from an IRA would save $2,400 in taxes as compared to a gift of cash.
For more information on how to leverage your IRA through charitable giving, please visit ij.org/IRA-gifts. For questions about planned giving—including gifts of retirement assets—feel free to contact us directly at [email protected].
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