UU St. Pete InfoNet: Make Mandatory IRA Distributions Work For You!

Make Mandatory IRA Distributions Work for You              

Want to save tax money while contributing to UUSP?

If you have reached the age where you must make required minimum distributions (RMDs) from your tax-deferred investments, usually 70-1/2 years, you can save on taxes while benefiting UUSP: make your pledge contribution directly to UUSP from your IRA.

By contributing directly from your IRA, you lower your taxable income by that amount. For example, if you donate $1 out of a $10 required minimum distribution, $1 goes directly to UUSP from your IRA account. For tax purposes, your income is now $9.

Compare that to withdrawing in cash the full RMD from your IRA and then donating $1. Your taxable income is $10 and you pay tax on the full amount of your required minimum distribution although you can deduct $1 as a charitable deduction.

IRA owners must be age 70-1/2 or older to make this kind of a charitable contribution. The annual limit on such a contribution is very high: up to $100,000 per year directly from one’s IRAs to an eligible charity such as UUSP without paying income tax on the transaction. If you file a joint tax return, your spouse can also make a charitable contribution of up to $100,000, meaning couples can exclude up to $200,000 of their retirement savings from income taxes if they donate it directly to a charity. Qualified charitable contributions must be made by December 31 each year in order to exclude that amount from taxable income for that year.

Don’t wait. Act now. Ask your accountant or tax preparer for the best way to make your contribution to UUSP.

For more information, visit https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions.

Contact: Carol Ulmer