Charity donation from IRA
Dear Terry,
I am in a position where I think I can make some generous charitable donations this year. I would like to do this in a tax advantaged way. I can do a QCD or what the Red Cross calls a “Charitable Rollover Gift Annuity” or both. I would also like to take advantage of my lowered RMD to make a Roth conversion up to the top of my tax bracket.
Do you have any suggestions or advice on which methods I should use and in what order I should do them?
Thank you
Terry Says
For this kind of advice you need to discuss with your financial planner or accountant.
Qualified charitable distributions (QCD) are donations from an IRA to a qualified public charity that can avoid the recognition of income on the donated amount. The account holder must be age 70 1/2 or older21. The annual QCD limit is $100,000 per account owner, which will be indexed by inflation starting in 2023. Additionally, a one-time gift of up to $50,000 can be made to certain types of charitable trusts or annuities beginning in 2023.
And a QCK can be used to satisfy the Required Minimum Distribution.
Read this for more details: https://www.newretirement.com/retirement/how-making-a-qualified-charitable-distribution-qcd-can-save-you-tax-money/.
But as to the Roth conversion, you might want to consider the impact of the additional income on your Medicare Part B premiums, and overall long-term tax picture. That’s pretty personal, so get expert and personalized advice on that part.
