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Old 07-21-2011, 06:24 PM
 
72,274 posts, read 72,222,083 times
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folks who have to take rmd's at 70-1/2 can end up having their social security taxed. these same people also give charatible contributions each year too and many cant even get enough in deductions to write off the contribution.

well a little know tax law lets you take advantage of a charitable distribution.

at 70-1/2 you can transfer from your ira directly to the charity of your choice without that distribution counting in your modified agi and yet it counts as an rmd.

many folks can avoid tax on as much as 18k in social security by not taking the rmd distribution directly and then giving to charity but allowing the ira trustee to transfer it directly .

its a good way to save tax on ss and to make sure you get the full deduction for the contribution when you may not have enough deductions to take it.

google it for more details.
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Old 07-21-2011, 07:28 PM
 
Location: Wisconsin
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Wow - that's good to know. Thanks, mathjak.
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Old 07-22-2011, 02:36 AM
 
72,274 posts, read 72,222,083 times
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its another new discovery for me.

most of the time im no wheres near doing this stuff so i dont get all the mechanics of it down at this point.

the important thing is just to know it exists . if and when your ready then you can get all the details.

it is amazing how many people do take those required min distributions at 70-1/2 ,it raises their income level to where ss is taxed, and then they donate to charity and to add insulte to injury cant itemize enough to take the charitable deduction.

they un-knowingly shot themselves in the food and could have saved thousands in taxes by this law.
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Old 07-22-2011, 06:00 AM
 
Location: Phoenix, AZ > Raleigh, NC
15,130 posts, read 19,131,569 times
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You're correct, and in SOME situations this can make sense.

But let's get this straight. You're giving away (albeit to charity) $18K in cash from your RMD to save $5,040 in taxes on your Social Security (28% of $18K).

If you're donating that kind of money anyway, your strategy makes great sense.

Here's another idea: you can gift up to $13K to anybody you want - your kids, siblings, parents, etc. Yes, you're going to pay taxes on that portion of your income, but THEY won't. So, your son, his wife, and their two kids could each receive $13K tax free. Guess what? Your spouse can also make a 13K gift. Now you've got $26K going to each of them TAX FREE. That's a life changing event for a family (a good event if they handle money properly.)
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Old 07-22-2011, 06:51 AM
 
Location: Coast of Somewhere Beautiful
2,339 posts, read 4,635,102 times
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Quote:
Originally Posted by mathjak107 View Post
at 70-1/2 you can transfer from your ira directly to the charity of your choice without that distribution counting in your modified agi and yet it counts as an rmd....
Interesting... Are you permitted to split your RMD - receiving some cash and having the IRA admins donate the remainder directly to charity?
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Old 07-22-2011, 07:08 AM
 
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Yep
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