Smarter Generosity

Cutting taxes to give more to your charities

Video 6

70+ Years Old

Yes, there are advantages of getting older! Especially for those of us who are 70 and beyond. We have the ability to make a direct gift to charity from our retirement accounts. These direct gifts to charity are not deemed taxable income to us.

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Those who are 70 years or older have the greatest and easiest opportunity for increased charitable giving.

Reaching these birthday milestones brings a massive benefit if properly taken advantage of. Consider it “your IRS birthday present” as you transfer a lot of your IRS tax dollars to causes you care about!

The IRS allows people after 70 1/2 years old to make a gift of up to $105,000 from their IRA, per person, directly to charities.

At the year they turn 73, they MUST take their required minimum distributions (RMD) from their individual retirement accounts (IRAs). Most employer accounts like 401(k)s, 457 allow workers to make pre-tax contributions that grow tax-deferred. There are often very attractive employer matching to these contributions. Just about all employees recognize the need in the advantage of these retirement accounts and properly funded, will be contributing 7-10%+ of their salaries into these retirement accounts. With employer matching and proper investing, with the miracle of compounding over decades, these accounts are often the largest financial asset of the employee. 

These donors can make a qualified charitable gift (QCD) to a nonprofit out of their tax deferred retirement accounts. This brings substantial benefits to both the donor and the nonprofit.

IRS law requires these distributions and imposes a whopping 50% tax penalty if they are not done.

Anyone in this required minimum distribution age bracket is paying attention to this. Most of them are probably taking these distributions throughout the year. Therefore, it doesn’t make a lot of sense to wait till the end of the year to make donors aware of the option of a direct gift to their charities. To the contrary, this awareness should be done at the start of the calendar year.