Giving Thanks for Retirement Income

We are in the season that reminds us to be thankful for what we have.  One of the things we should be thankful for is having a retirement account.  There are many people (too many!) that have not adequately saved, and will struggle the rest of their lives.  If you have done a good job of saving and you are adequately funded for retirement, congratulations!

For those who are in that situation, many times they don’t want to have to take the Required Minimum Distribution (RMD) because they are still working, or have other income that is sufficient, and they don’t want additional taxable income.  There is something you can do, however, to avoid the tax recognition and at the same time, bless your favorite church or other charity.

The American Taxpayer Relief Act of 2012 extended the qualified charitable distribution provisions through the end of 2013.  This means that if you have an IRA, you can make a contribution directly from it to a qualified charity.  The contribution you make can count toward your RMD.  The maximum amount you can give is $100,000 in 2013.

Remember, however, that the distribution has to be directly from the IRA plan administrator to the charity.  You can’t receive it first, and then write a check, or you will have to recognize the income you received before you can deduct the charitable contribution.  Sometimes that will trigger other tax events that may cause you to not be able to deduct your entire contribution.

Also, this is only for IRA accounts.  If you don’t have an IRA but have another qualified plan, you can consider opening an IRA account, rolling over your other deferred income funds into it, and then make the contribution.  This can be complicated, however, and you will have to do it carefully to avoid triggering some unwanted tax consequences.  If you are interested in doing this, contact your plan administrator to get the details.  This is a great way to show how thankful you are that God blessed you in your later years!

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