In 2013 You Have New Options on How to Receive Your Required Minimum DistributionSubmitted by WWK Wealth Advisors on April 17th, 2013
As part of the last minute “fiscal Cliff “ deal passed by congress, section 208 of the American Taxpayer Relief Act of 2012, (P.L. 112-240) (the Act), enacted Jan. 2, 2013, extended application of Internal Revenue Code section 408(d)(8), reauthorizing qualified charitable distributions (QCDs) made during 2012 and 2013. For the full article click here.
So what does this mean in laymen’s terms? You have two options:
- Receive the RMD like you have in the past and pay the income taxes on the amount received.
- Direct the RMD (up to $100,000) directly to the charity of your choice. Now termed a QCD or qualified charitable distribution. Since you never receive the income there are no income taxes to pay and you get to continue to support a cause that you are passionate about.
In summary, this allows you to take money that you have never paid tax on, transfer those funds to your chosen charitable organization and not incur any income taxes. Plus, you will not have additional taxable income from distributions that could affect the taxability of you Social Security or any other benefits. Not a bad deal.
There are a few steps that need to be worked through with your IRA custodian (custodian = investment company that holds your IRA) so contact us here at WWK Wealth Advisors and we will work with you and your tax advisor to walk you through the process.