Charitable Giving from an IRA Earns Tax Benefit

In the final weeks of 2019, many of us are considering what we can do to help important philanthropies and causes continue their vital work, and the tax benefits that incentivize such contributions.  Under the new federal tax law, if you’re 70 ½ years or older and have an IRA, you can donate some or all your required minimum distribution (RMD) to a charity, like the Association of BellTel Retirees, TAX-FREE!   

And you don’t even have to itemize!

Upon reaching 70 ½ years old, IRA owners are obligated to withdraw a minimum amount of funds annually, called the RMD, and those distributions are taxable, unless of course it is for is a qualified charitable distribution (QCD).

You don’t need to make a huge donation to benefit from this tax break. For a retiree in the 25% tax bracket, an IRA charitable contribution of $5,000 could reduce your income tax bill by $1,250. Even a $1,000 donation would save you $250 in taxes.

The RMD amount donated directly through the IRA doesn’t increase your adjusted gross income, which determines the size of Medicare premiums and the tax treatment of Social Security benefits.

Not only will your donation be tax-free, you won’t move into a higher tax bracket and end up with fewer benefits. Essentially, it is all upside.

In addition to the rules governing minimum age (70 ½) and maximum donation amount ($100,000), the QCD must also go to a public charity and it must be a check payable to the charity—not a check payable to you and endorsed by the charity.

Typically, IRA custodians send the IRA owner QCD checks payable to the charity of his or her choosing, and then the IRA owner can mail them to the charity and receive a confirmation receipt to document the gift.

There is still time to act in the 2019 tax year.  If you qualify, please consider making a charitable donation directly through your IRA to the Association of BellTel Retirees and receive this tax benefit.

We cannot continue to do the essential work we do protecting the earned health and retirement benefits of our members without your support.

Here is a perfect way to help us help you and your fellow retirees while enjoying a tax benefit. Check with your tax preparer, accountant or financial advisor with any questions.

And thank you for your consideration.

Here is a link to 2018 article on the same issue: https://belltelretirees.org/wp-content/uploads/2018/08/BellTel-Fall-2018-Newsletter.pdf