At age 70 and a 1/2, individuals are required to take a minimum distribution from their IRA accounts. For some individuals, the income from their IRA required minimum distribution hoists their income into the next tax bracket, which can mean a larger tax liability. Thus, in late 2015, a U.S. law was set in place that gives individuals another option for their IRA minimum distribution – the IRA Charitable Rollover. This law entitles any individual who is 70 ½ or older to transfer up to $100,000 from their IRA directly to a qualifying charitable organization. The amount transferred to charity is not counted towards the donor’s taxable income, and it allows the donor to evade any direct IRA influence on their mobility between tax brackets.
It is important to remember that this transfer must go directly from your IRA to the charity of your choice. If it comes to you first, then it will be counted towards your income. Also noteworthy, the maximum $100,000 distribution is per taxpayer, per year.
Tax savings aside, this is a wonderful way to share your wealth and support your favorite charity or charities.
Things to remember:
- Individuals age 70 ½ and over qualify
- Up to $100,000 per taxpayer per year may be transferred using a qualified charitable distribution
- Wealth from an IRA may be heavily taxed when/if it is passed on to heirs
Want to know more about how you can make a qualified charitable distribution to Prevent Child Abuse Arizona? Give us a call today (928) 445-5038. Our team is available to help.
Prevent Child Abuse Arizona does not offer legal or tax advice. When considering a charitable gift through your assets, it is recommended that you seek the advice of your tax professional and/or attorney.