Ask Terry Questions qualified charitable deduction from RMD

qualified charitable deduction from RMD

By Terry Savage on September 23, 2022 | Financial Planning / Retirement

I have a traditional IRA that I can use to open a Roth IRA, does it make sense to keep the traditional IRA until I reach the age of 70 1/2 and then take a yearly RMD from the IRA and use it to make a QCD and use it to reduce my federal tax vs open the Roth IRA and pay the taxes this year? I am currently 68 years of age and in the 24% tax bracket currently. Thanks in advance for your attention to this matter. Barbara

Terry Says

You are getting way too complicated! And you’re not in a high enough tax bracket to be doing this. I suggest you just keep your traditional IRA and inside it you should have some money in a money market fund. Forget a Roth IRA. Just start taking required minimum distributions at age 72. If you want to give some to a qualified charity, directly as part of your RMD, you won’t pay taxes on the withdrawal. Otherwise all withdrawals will be taxed as ordinary income. Relax — and don’t start messing around with this account!

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