Charitable IRA Distributions

Asset Allocation GettyImages-512058570 091516A little known but potentially powerful tool for the philanthropically inclined is the “qualifying charitable distribution” (QCD) from an Individual Retirement Account (IRA).  A QCD must be:

• From a traditional IRA or Roth IRA
• Transferred directly from the IRA Trustee to the charitable organization
• Made on or after the IRA owner has reached age 70 ½
• Contributed to a qualified charitable organization, as defined by IRC Section 170(b)(1)(a)

There are several tax benefits of QCDs, the most notable of which is that the distribution is not included in your Adjusted Gross Income (AGI).  This can provide a significant benefit over taking a distribution personally and then making a charitable contribution personally, which results in higher AGI and then (in […]

By |June 15th, 2016|Categories: BCo Community News|Tags: , , |Comments Off on Charitable IRA Distributions

Tax Benefits from Hiring Children to Work in the Family Business

As a business owner, you have the opportunity to save income tax and payroll tax (when looking at the family as a whole) by putting your children on the payroll.  In doing so, you may be able to turn high-taxed income into tax-free or low-taxed income, achieve social security tax savings (depending on how your business is organized), and even make retirement plan contributions for your child.  In addition, employing a child age 18 (or if a full-time student, age 19-23) may be a way to save taxes on the child’s unearned income, as explained below.  Here are the key considerations.

Turning High-Taxed Income into Tax-Free or Low-Taxed Income

You can turn some of your high-taxed income into tax-free or low-taxed income by […]

Using a Longevity Annuity to Save for Retirement

The U.S. Treasury Department recently announced that individuals are now allowed to invest a portion of their 401(k)s or IRAs into a longevity annuity. A longevity annuity, a type of deferred income annuity, provides a steady flow of income to an individual once they reach a certain age and continue to receive income for as long as they live. The longer you defer receiving the payments, the higher the payment amounts you will begin collecting. With healthcare costs rising, especially at an older age, investing in a longevity annuity can be another alternative for retirees to pay for long-term care.

The new Treasury rules also make investing in longevity annuities more appealing to individuals by exempting the purchase of the annuities from the required […]

By |September 17th, 2014|Categories: Individual Tax, Retirement Planning|Tags: , , , , |Comments Off on Using a Longevity Annuity to Save for Retirement

IRA One-Rollover-Per-Year Limitation

The IRS clarified its rules regarding non trustee-to-trustee IRA transfers recently, based on the Bobrow U.S. Tax Court decision. Beginning as early as January 1, 2015 (the IRS has yet to decide on an implementation date), individuals are limited to one non-taxable IRA-to-IRA rollover every 12 months. A non-taxable IRA-to-IRA rollover is a transaction where a taxpayer takes a distribution from a traditional IRA and then deposits that same amount into another (or the same) traditional IRA within 60 days of the distribution. Many taxpayers take advantage of this rule to satisfy short-term cash flow needs. Under previous law, this limitation was applied on an IRA-by-IRA basis, meaning if you had three IRAs you could do three non-taxable IRA-to-IRA rollovers every 12 months, […]

By |August 18th, 2014|Categories: Individual Tax, Trusts and Estates|Tags: , , , , , , |Comments Off on IRA One-Rollover-Per-Year Limitation
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