Charitable donations are given in many shapes and forms.  Many people donate housewares, clothing, time and money to various charitable organizations.  Charitable donations are a wonderful thing that help many people in need.  In addition, there may be a tax benefit for you as well depending on your ability to itemize on your taxes. Today, we’re going to focus on the tax benefit of donating your Required Minimum Distribution (RMD) from your tax qualified retirement account (ex: IRA, 401k, 457, SEP).

Our current tax code requires you to have more than the standard deduction in itemized expenses to be able to benefit from the charitable deduction. In addition, if you withdraw your RMD from your tax qualified retirement account and have it sent to you first, then you are also paying income tax on your withdrawal.  So, you could be paying income tax and not receiving the charitable deduction on your taxes.  There is a way around both these dilemmas!

  • Have your tax qualified retirement account custodian send your RMD directly to the charity, so that it never comes to you directly! It’s called a Qualified Charitable Donation (QCD).
    • This allows the charity to receive the donation as usual.
    • It also keeps the RMD from being taxed as income to you
  • There are some rules to be aware of around the QCD
    • Give up to $100K from IRA per person
    • Must go directly to the charity
    • Counts as an RMD but not reported as income
    • No deduction on income tax

Even though there may be no deduction, in many cases it works out better for the retiree to not have the taxable income.  It’s knowing information like this that can be of benefit to you and your retirement.  Contact us today to book an appointment with one of our Lockheed Martin Retirement Specialists to make sure your taking advantage of the little things!

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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