Not Sure What to Do With Your RMD? Consider Charity!

Not Sure What to Do With Your RMD? Consider Charity!
21 Sep 2016

In 2015 Congress made permanent your ability to gift up to $100,000 from your IRA when withdrawn to satisfy the Required Minimum Distribution (RMD) at 70 ½. Many people are not aware of this and unfortunately pay taxes on the distribution when they didn’t need the money anyway. The donation counts towards your RMD yet does not increase your adjusted gross income. The money needs to be transferred directly from your IRA to the charity in order to be tax-free. This could be helpful if you don’t itemize and can’t deduct charitable contributions.

For many people the first time they touch their IRA will be when they have to at 70 ½. Using this strategy can help you implement the philanthropic aspect of your estate plan and help reduce your tax burden as well. Because the law is permanent, IRA administrators are starting to simplify the process. Check with your IRA custodian to see if they have the processes in place to implement this strategy. As with any tax reducing strategy it’s best to consult your tax professional to see how this little-used rule can benefit you and the charities you care so much about


Good luck! Jeff



*Cambridge and Premier Investments of Iowa, Inc. do not offer tax advice. Please consult your tax preparer.


Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.