You may be aware that at age 70.5, taxpayers were required to take taxable withdrawals or Required Minimum Distributions (RMD) from their retirement savings accounts. To reduce the tax burden of RMDs, gifts can be made to charities like United Way directly from retirement accounts. The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019 and will take effect on January 1, 2020. This act has many provisions, but key for those making charitable gifts it increases the age retirees must begin taking taxable withdrawals from their retirement savings from 70.5 to 72. However, you may still make a Qualified Charitable Distribution (QCD) at 70.5 years. And, if you turned 70.5 in 2019, you are still subject to RMDs. Those turning 70.5 in 2020 won’t have to take a RMD until they are 72 years old.

Things to consider:

  • Donors who have large IRA balances might think about beginning to contribute at 70.5 years to reduce RMDs.
  • Donors should consider leaving non-IRA assets to their families and utilizing retirement savings for charitable gifts because of the elimination of “Stretch” IRAs. (Non-spouse beneficiaries must withdraw all assets on an inherited account within 10 years.)
  • You can help further United Way’s mission of driving sustainable improvements in the well-being of children, families and individuals in our community with your IRA.

Talk with your financial advisor or tax professional to determine your best strategies, and contact Eve Powell, epowell@unitedwayatlanta.org, for a confidential conversation about ways to save on taxes while supporting our community.