Some Good News in the Tax Bill

Here comes the New Year, and with it the new tax law. Reviews tell us that as the nation ages, the new law shifts many benefits to younger families. But there is a special tax break available just for seniors, passed by congress in 2016, and it doesn’t go away in the New Year. In fact, the newly signed tax bill makes it even more advantageous.  It’s called a qualified charitable distribution and only applies to Individual Retirement Accounts (IRAs).

Did you know that if you are 70 ½ or older and taking mandatory distributions from your IRA, you can convert these withdrawals from taxable income into a tax-free event? When you donate your IRA distribution directly to an eligible non-profit as a charitable contribution, the event is not taxable as income and it may even lower your total Adjusted Gross Income.

If you do not need your IRA assets to support your current or future living costs, this may be your best charitable giving strategy going forward.  The exemption is good for up to $100,000 of IRA assets annually.  That’s a big benefit! Especially if, with the new, higher standard deduction, you may no longer be itemizing your charitable gifts.

Also, consider that IRA assets increase the tax liability for your estate after your death. By distributing these assets to charity during your lifetime or as part of your estate planning as a charitable rollover, you can eliminate the taxes on these assets.

At Rodman & Associates, we would be happy to work with you, and your financial advisors, to strategize sequential gifts to the charity or charities of your choice. By using IRA assets for your giving, you can help dreams to come true for the causes you support, during your lifetime and beyond.

See, Santa does come to visit, even to seniors!

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