If you are older than 70½ now is a great time to take advantage of giving an IRA distribution to a charity. That’s because it’s free. You can rollover up to $100,000 from your IRA to your favorite charity.
This distribution can be made to any 501(c)(3) charity. And the best part is you do not have to report the distribution as income on your tax return.
There are some restrictions. Any rollover for 2016 must be completed by Dec. 31. If you have already done a rollover this year, remember the limit is $100,000. Any amount greater than that will be added to your taxable income.
Rollovers can only be made from traditional IRAs. Rollovers from other plans do not qualify.
Once you reach 70½, you are required to take minimum distributions from your retirement plans each year. IRA charitable rollovers count towards your minimum required distributions for the year.
So not only is this a great way to avoid income tax, you are donating to your favorite charity at the same time. If you’re not certain about the procedure, we can help you accomplish the rollover.