Blair Bulletin

May Result in Tens of Thousands in Tax Savings

March 2017

1. Are you age 70½ or about to be?

2. Do you have an IRA?

3. Are you feeling charitable?


2017 03a 01

What’s It All About?

First the details and then the benefits to you … perhaps for many tax years to come.

The Charitable IRA Rollover was passed by Congress and signed into permanent law by the President. The fact that it is now permanent means that it is likely to be a valuable tax savings and charitable giving tool for you beginning in 2017.

You may decide each tax year to direct that up to $100,000 be distributed from your IRA directly to one or more public operating charities. Doing so will deliver a tax break for you and financial help for your favorite charity or charities.

Important: You must transfer the money directly from your IRA to the charity. The tax-free transfer won’t count if you withdraw money from the IRA first and then contribute it to the charity.

Since you will direct that the IRA distribution be directly channeled to the charity, you will not declare the distribution as income. Of course, that reduces your adjusted gross income and the taxes that would otherwise be required to pay. Oh, and an added benefit is the IRA Rollover contribution counts toward your required minimum distribution (RMD) thereby further reducing your need to declare IRA distributions as income.

An unattractive alternative would be to take an IRA distribution, pay the taxes due and then contribute the after-tax remainder to your charity. The Charitable IRA Rollover lets you enjoy that much more money to do good plus enhanced benefits for both, you the taxpayer, and your selected charity.

As you may expect, contributions from the IRA to a charity are non-deductible. Remember, you received a deduction as you contributed to your IRA and earnings accrued tax-deferred. However! You may be among the many seniors who no longer itemize your deductions and therefore get no tax benefit when you donate to your favorite charitable causes.

Here’s a way to benefit your charity while lowering your adjusted gross income as well as your taxes. How? Remember the IRA distribution sent directly to the charity is not income to you and counts toward your RMD which otherwise would be declared as income … potentially increasing your tax liability. Certainly a win-win!

You may find additional benefits as well. Since the tax-free transfer reduces your adjusted gross income (AGI), you may avoid the Medicare high-income surcharge which boosts our Part B and D premiums if your AGI exceeds $85,000 if single or $170,000 if married filing jointly. Likewise, less of your Social Security benefits may be taxable.


So if you are age 70½ or about to be, have an IRA and are feeling the urge to better your favorite charity … The Charitable IRA Rollover may be your cup of tea.