The IRA is a time-tested and popular retirement savings strategy. However, if you find yourself in the fortunate position of not needing your IRA income to stay happy and healthy, you could bypass minimum distribution penalties by gifting your account proceeds to charity.  Charitable IRA rollover

Charitable Rollover IRAs in California

A traditional IRA allows the account owner to make tax-deferred contributions up to a certain annual limit. Although these contributions may not be taxed at the time they are deposited, you will have to pay federal income tax on any eventual disbursements. Even if you do not need the money, the government requires that you begin making withdrawals after age 72.

The amount of money you are required to withdraw depends on your account’s fair market value and your statistically predicted life expectancy. This is called your required minimum distribution, or RMD. If you skip an RMD, you could face penalties equal to 50% of your required minimum distribution.

If you do not need your IRA income for retirement, you have the option to re-direct your investment retirement account proceeds to a charity. Qualified charitable distributions (QCD) are not only tax-exempt but offer an opportunity to save money on your own taxes.

How a Qualified Charitable Distribution Works

  • You can set up a QCD if you are at least age 70 ½.
  • Your planned QCD must satisfy the required minimum distribution.
  • You must identify an eligible 501(c)(3) charity entitled to receive a QCD. A qualifying charity could be a local church, homeless shelter, or animal shelter.
  • You can set up direct QCD payments to the charity.

You may also withdraw IRA proceeds and transfer only a portion to a qualifying charity, provided that your net withdrawals satisfy your required minimum distribution amount.

Do You Want to Establish a Charitable Legacy?

Qualified charitable distributions help you establish an intergenerational legacy, saving you money on tax while making the world a better place. However, a QCD is not a one-size-fits-all solution. Depending on your estate’s unique qualities, there may be other ways to serve yourself, your loved ones, and your community.

Please send the Law Firm of Kavesh, Minor & Otis, Inc. a message online, or call us at 1-800-756-5596 to schedule an initial consultation.

 

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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