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Once you turn 70 ½ the tax code requires you to begin withdrawing funds from your retirement accounts. The IRS is saying, ‘We’ve given you a tax break for decades on these dollars you contributed to your retirement account (401k, IRA etc.) and NOW we want some taxes from you.”

So by being told how much to withdraw from your tax deferred accounts, the tax code is dictating to you what your taxes will be. This is done according to a life expectancy table. For example, starting @ 70 ½ you first have to withdraw 3.65% of your account balance from the previous December 31st.

One way to shrink the tax sting of this taxable distribution is to send it straight to a charity. If charitable giving is a regular habit, a qualified charitable distribution, a QCD, is a tax efficient way to meet your philanthropic goals. You can transfer up to $100,000 per year from your traditional IRA to a charity each year which will count as satisfying your requirement minimum distribution (RMD.) This distribution will not be counted against you as taxable income. If used correctly, the additional tax liability from RMD’s can be dramatically reduced.

If you would like to discuss other ways to minimize taxation in your retirement planning, please

*Please consult your tax advisor.

The first step toward achieving your retirement goals is having a plan…