Interested In Hiring Derek As Your Advisor? 

Recent Posts

Archive

Tags

Turning 70 1/2 and I do not need my Required Minimum Distribution (RMD)...

You will be turning age of 70 ½, the magic number in which the IRS requires you to take your required minimum distribution from your IRA account(s). Fortunately through proper planning, this income isn't needed to meet your financial needs. However, this RMD is enough to potentially have a negative impact on your tax situation. The good news is a Qualified Charitable Distribution (QCD) can help benefit your favorite charitable organization while simultaneously benefiting yourself.

The process is as follows. Individuals 70 ½ or older can complete a trustee-to-trustee transfer from IRA to a qualified charity of their choice. A transfer of up to $100,000 per year is allowable without having to recognize the amount as ordinary income. Important to note, the QCD must be the first distribution from the IRA for the year.

Example: Jane recently turned 70 ½ and has a RMD obligation of $15,460. She does not need the $15,460 for her lifestyle as she has other means of income and she has historically given $12,000 per year to her favorite qualified charity. In this case, Jane has not taken any previous IRA distributions in the current year, which allows her to use QCD. Jane decides to process a $12,000 QCD to her favorite charity satisfying $12,000 of the RMD. This leaves her with $3,460 to distribute and report as income.

Why take the QCD vs the deduction? In executing a QCD you are effectively excluding the RMD from income. An RMD may increase AGI, which can increase taxability of social security, increase Medicare premiums or adversely impact itemized and other deductions. The QCD can be slightly more efficient.

How to complete a QCD

1. Be age 70 ½ or older on the date of the distribution

2. Search your organization to make sure it is qualified https://www.irs.gov/charities-non-profits/exempt-organizations-select-check

3. Request an IRA distribution; make the check payable to the charity

4. Do not withhold taxes on the distribution

5. Send the check directly to the charity or to the IRA owner to be forwarded along to the charity

For additional questions or if you would like to learn more about Derek Sabine and Newpointe Wealth, please visit www.newpointewealth.com or follow us on social media.

Disclosure: This is not considered tax advice; we strongly recommend you consult a tax advisor before making a decision on a Qualified Charitable Distribution. Content in this material is for general information only and not intended to provide specific financial or tax advice or recommendations for any individual.

Newpointe Wealth 

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CT, FL, GA, MA, NC, NH, NJ, NY, SC, VA

Newpointe Wealth, LLC

1 Lowlyn Rd

Westport, CT 06880

 

203-557-0291

Derek@newpointewealth.com

©2019 Newpointe Wealth, LLC