A Way to Give: Tax Planning Opportunities for Senior Adults

By Terry Mitchell, CPA, PPM

Terry Mitchell, CPA, PPM

Senior individuals with retirement accounts (IRAs, etc.) are required to generally take annual withdrawals from these accounts based on the amount in these accounts and participant age.  These annual distributions begin once you reach the age of 70 ½  and continue every year thereafter.  These annual distributions are generally included in your taxable income.  Failure to take these required withdrawals can result in a penalty of 50% of the amount not withdrawn.  

There is some good news because of some tax planning opportunities with these required annual distributions.  You are permitted to make annual cash donations to IRS-approved public charities directly out of your IRAs.  These donations are known as Qualified Charitable Distributions (QCD’s).  The maximum annual amount that can qualify for a QCD is $100,000.  This applies to the sum of QCD’s made to one or more charities.  If, however, you file taxes jointly, your spouse can also make a QCD from his/her own IRA within the same year for up to $100,000.

If you would like to make a contribution to the Stegall Seminary Scholarship Foundation and you are currently required to take these required annual withdrawals from your retirement accounts (IRAs), this tax-planning opportunity provides a significant tax-saving opportunity.  Rather than take the annual distribution and pay income tax on the funds, you can direct the funds to the Foundation and not have to pay income taxes on the amount donated.  This means, you can donate all or part of your required annual distribution and convert taxable required distributions into tax-free QCD’s.  

Please contact either us at stegallscholarship@gmail.com, or your tax professional for information on this significant tax-saving opportunity.  Thank you for your continued prayers and support.

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