Maximize the Tax Benefits of Your IRA Before Year-End

The end of the calendar year will soon be upon us. Many individuals are currently reviewing their potential income tax liability for 2022 and considering strategies to minimize their tax burden.  

Charitable giving can be an important aspect of year-end tax planning, which also provides the opportunity to support causes important to you. A Charitable IRA Rollover, sometimes referred to as a Qualified Charitable Distribution (QCD), is a popular method of giving often used to accomplish year-end financial and philanthropic goals. 

With a Charitable IRA Rollover, the IRS permits individuals age 70 ½ and older to transfer up to $100,000 directly from their IRA to a charity without realizing income or income tax on the distribution. Beginning at age 72, individuals must take a required minimum distribution (RMD) from their IRA annually. This requirement can be a challenge when the distribution increases one’s tax liability or negatively affects the timing of his or her long-term financial plan. A contribution utilizing a Charitable IRA Rollover addresses these issues in a tax-wise manner because the direct distribution to charity counts toward the individual’s required minimum distribution. It is important that the transfer be made directly from the IRA to the charity to prevent receiving taxable income. 

The benefits of a Charitable IRA Rollover include the following: 

• Making a distribution directly from your IRA to charity can satisfy all or part of your required minimum distribution for the year, which the IRS requires at age 72 and older. 

• Your gift is a tax-free distribution because the funds are transferred directly from your IRA to charity with no taxable income to you. This allows you to benefit even if you don’t itemize deductions on your tax return. 

• Your gift has an immediate impact on the mission of your charity. For example, a Charitable IRA Rollover to Huntington University can benefit the Forester Fund, scholarships, capital projects, or other areas important to you. 

To learn more about a Charitable IRA Rollover and its many benefits, contact Director of Gift & Estate Planning Steve Thomas, JD, at (260) 359-4005 or sthomas@huntington.edu.