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There’s still time in 2024 to withdraw all or a portion of your Required Minimum Distribution (RMD) tax-free from your IRA. This will reduce your adjusted gross income (AGI), which may help put you in a lower tax bracket.
RMD withdrawals are typically subject to income tax at ordinary income rates.
However, individuals who direct funds from their IRA accounts to charitable organizations (known as a Qualified Charitable Distribution or QCD) can avoid income tax on RMD funds used for those contributions. This may reduce your AGI, making it a tax-wise way to make charitable gifts.
It is a way to take all or a portion of your RMD without federal income tax costs.
In 2024, you can make total QCDs up to $105,000, and all transfers must be made directly from an IRA (i.e., if you have a 401(k), the amounts to be used must first be rolled over tax-free into an IRA). Additionally, you cannot reap any economic benefit, other than a tax-free withdrawal.
OR, USE YOUR IRA TO PURCHASE A GIFT ANNUITY
Alternatively, a tax-free IRA withdrawal may be used to establish a charitable gift annuity (CGA) before the end of the year. This will allow you and potentially your spouse to receive high, fixed-rate income for life. The IRA distribution for the CGA will not be subject to federal income tax. The CGA lifetime rate is based upon the life/lives of the annuitant/s. Only spouses may be two-life beneficiaries. In exchange for the tax-free QCD that is used for the CGA, there is no income tax charitable deduction, and the annual annuity amount is taxed as ordinary income. The limit for the QCD CGA in 2024 is $53,000 per individual IRA owner ($106,000 if both spouses each use $53,000). CGA rates are generous and fixed.
There’s still time. Let us show you how. Please contact us at plannedgiving@afhu.org or 212.607.8524. |
