Reminding readers that our estate planning attorneys at Geyer Law do not offer tax advice, instead working in concert with our clients’ tax professionals, we wanted to alert clients to end-of-year planning opportunities. In last month’s blog, we reviewed the 5 kinds of taxes that can affect estate planning, including gift tax, income tax, estate tax, inheritance tax, and generation-skipping taxes.
With just a few weeks until calendar year-end, we’d like to call attention to one planning move that, for some, might fall into the killing-two-birds-with-one-stone category, the Qualified Charitable Distribution. If:
- a) you are age 70 ½ or older and wish to make a distribution to charity from an IRA or if you are obligated to take a required minimum distribution out of your IRA but have not yet done so
AND
b) you are interested in reducing the size of your estate through charitable giving,
consider (and quickly) a direct contribution (up to $100,000) to a charity(ies) right out of your IRA account. The charitable distribution will count as your required minimum distribution even though the funds are payable to charity and not to you.
Normally, required minimum distributions are taxable to the IRA owner. But, executed correctly, the distribution to charity counts as the participant’s required minimum distribution but no income tax is paid since the money goes to charity and not to the individual. As charities are tax-exempt organizations, no income tax is due. Participants do not get a charitable deduction as the amount withdrawn is not included in income to the participant.
Next year, the annual cap for Qualified Charitable Distributions will rise to $105,000.
– by Ronnie of the Rebecca W. Geyer & Associates Blog Team
Reminding readers that our estate planning attorneys at Geyer Law do not offer tax advice, instead working in concert with our clients’ tax professionals, we wanted to alert clients to end-of-year planning opportunities. In last month’s blog, we reviewed the 5 kinds of taxes that can affect estate planning, including gift tax, income tax, estate tax, inheritance tax, and generation-skipping taxes.
With just a few weeks until calendar year-end, we’d like to call attention to one planning move that, for some, might fall into the killing-two-birds-with-one-stone category, the Qualified Charitable Distribution. If:
- a) you are age 70 ½ or older and wish to make a distribution to charity from an IRA or if you are obligated to take a required minimum distribution out of your IRA but have not yet done so
AND
- b) you are interested in reducing the size of your estate through charitable giving
consider (and quickly) a direct contribution (up to $100,000) to a charity(ies) right out of your IRA account. The charitable distribution will count as your required minimum distribution even though the funds are payable to charity and not to you.
Normally, required minimum distributions are taxable to the IRA owner. But, executed correctly, the distribution to charity counts as the participant’s required minimum distribution but no income tax is paid since the money goes to charity and not to the individual. As charities are tax-exempt organizations, no income tax is due. Participants do not get a charitable deduction as the amount withdrawn is not included in income to the participant.https://www.fa-mag.com/news/three-estate-planning-to-do-s-before-december-31–2023-75617.html?section=40&utm_source=FA+Subscribers&utm_campaign=303e502042-FAN_FA+News_AD+VERSION_COPY_02&utm_medium=email&utm_term=0_-d5e82223f7-%5BLIST_EMAIL_ID%5D
Next year, the annual cap for Qualified Charitable Distributions will rise to $105,000.
– by Ronnie of the Rebecca W. Geyer & Associates Blog Team
