Still need to take your RMD? Put it to work for good and save taxes

Thanks to the PATH Act, passed by Congress at the end of 2015, you can take the Required Minimum Distribution (RMD) from your IRA by transferring up to $100,000 directly to a qualified charity. A Qualified Charitable Distribution (QCD) counts towards an IRA owner’s RMD. A QCD doesn’t increase your taxable income, and so can’t be taken as a deductible charitable contribution.  This combination can save taxes over simply donating the same amount to a charity by check or credit card. This is because phase-out rules whittle away itemized deductions for seniors in higher tax brackets, so a direct transfer keeps the entire amount of the contribution out of your taxable income. And this saves you taxes.

Before the PATH Act, this popular provision was generally extended late every year, but only for that year. This uncertainty forced seniors to scramble to make it happen by year-end. Now that it’s permanent, you can plan your giving strategy well ahead of the December 31 deadline for taking your RMD. Remember that if you don’t take your RMD, you’ll pay a 50% penalty of the amount you should have taken. Call our office today so we can help you with the best strategy for your situation.

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