
A Smart Asset article outlines five strategies that can potentially reduce taxes on the Required Minimum Distributions seniors must begin taking after age 73. While, at Geyer Law, we offer no tax advice, instead coordinating with their financial and tax advisors, there are several tactics mentioned in the article that relate directly to estate planning…..
- Use RMD withdrawals to pay for qualified expenses.
If certain medical expenses, home modifications, or long term care premiums exceed a certain percentage of AGI (Adjusted Gross Income), they may qualify for tax deductions, offsetting the tax otherwise due on the RMD.
When it comes to home modifications, for those of our estate planning clients who’ve decided to “age in place”, it’s important for them to decide what will happen to the property after they are gone. Options include gifting the home while they are still alive, naming their children as beneficiaries in a will or trust, or signing a “transfer on death” document.
As Indiana elder law attorneys, we know that long-term care planning has an important place in both retirement and estate planning, helping clients take charge of their finances and protecting both themselves and their heirs. Although Long Term Care insurance premiums continue to rise, if there can be an offset of tax on RMD, that offers some relief.
- Make Qualified Charitable Distributions (QCDs)
A QCD allows you to transfer up to $108,000 in 2025 directly from an IRA to a qualified charity.
Rather than taking the distribution from a traditional IRA, the IRA participant may direct the IRA custodian to send the money directly to an eligible charitable organization. If this election is made, there will be no tax due on the distribution as the funds go directly to charity and never become part of the participant’s gross income. Since the funds are never included in the participant’s income there is also no charitable tax deduction. The process of choosing which nonprofit organizations to support is one vital component of estate planning.
– by Rebecca W. Geyer