Help—IRA distribution to qualified charity

[iris lilies]

https://www.investopedia.com/taxes/can-i-use-money-my-ira-donate-charity/

Sweetana posted this guideline a couple days ago. I read it and have a different interpretation than that of DH.

Here is another source talking about it. https://www.kiplinger.com/article/retirement/T032-C001-S001-making-tax-free-charitable-donations-from-an-ira.html



Here’s my question: can I, age 65, move money from an IRA to a qualified charity, without me paying taxes or without them paying taxes? I interpret these articles to say I can only do that when I am 70.5 years old.

edited to show another source

[sweetana3]

My husband said yes, it has to be 70.5 unless they increase it. Our plans and actions are based on that.

[iris lilies]

My husband said yes, it has to be 70.5 unless they increase it. Our plans and actions are based on that.
Thank you.

As an aside, can any of you see why I’m driven mad by financial discussions with DH? Honestly we read three separate articles on the web and came to opposing conclusions. To me, is very obvious you have to be 70 1/2.

Also, I learned from my employer-based retirement plan representative that employer plans do not qualify for this tax break.

[Tybee]

That is interesting, thank you for figuring that out, IL.

But couldn't you, even before the age of 70.5, you establish a charitable account--I know you can with Schwab--and then take the tax donation for doing that, then generate income in that account and donate it each year to the rescue dogs? Or anyone else you wanted?

In fact, I don[t know why you wouldn't just do that now, since you are not worried about leaving money to your children--I know I would if I didn't children and grandchildren that I wanted to leave money to.

See
https://www.schwabcharitable.org/public/charitable/home

[SteveinMN]

... and this is still true despite the changes made with the CARES Act?

[iris lilies]

That is interesting, thank you for figuring that out, IL.

But couldn't you, even before the age of 70.5, you establish a charitable account--I know you can with Schwab--and then take the tax donation for doing that, then generate income in that account and donate it each year to the rescue dogs? Or anyone else you wanted?

In fact, I don[t know why you wouldn't just do that now, since you are not worried about leaving money to your children--I know I would if I didn't children and grandchildren that I wanted to leave money to.

See
https://www.schwabcharitable.org/public/charitable/home

Without delving into this deeply, my immediate reactions are these, and
I don’t mean any to sound smart ass:

1) in my household we do not “just” do anything with financial investments. I can barely talk to DH about financial stuff without loud argument and waving of arms happening, so anything requiring more than five minutes of discussion is close to impossible. He is always convinced he is right and will not budge.

2) This plan seem to have the premise we itemize deductions on tax returns.
I am not sure we have ever itemized once in the past 10 years, and with Trump’s new automatic deduction rates, we will not ever do it.

As I told our dog rescue head, my household is talented at accumulating funds. We are weak at investing and are stoooopid about end-of-life draw down of assets.

It IS time we create an actual plan for asset distribution. While I don’t care about leaving money to anyone and would prefer to die broke, I want to assure my funds as they exist are there when *I* need them or when DH needs them. Which is why doling them out a bit at a time seems safer to me.

But I will say that after thinking about DH for the past ten years and his 0 income if I die, I am less concerned than before he inherited a Family farm and seems (to me) to be frittering away its value. If he feels ok to do that,
I feel ok to be less concerned about his financial well being.

All of this is, of course, from my point of view. He would tell a different tale!

We do, of course, have a will and trust.

See, your point about getting older and managing complex accounts is one that speaks to me deeply. Where I single, I would manage my assets is very differently than how they are now managed.

edited for additional info and clarification

[iris lilies]

Trying to edit, it this software is behaving badly today

[Tybee]

That all makes total sense!

I think because of witnessing my mom's dementia and how she could not longer work on her beloved stock portfolio, I have this need to get things straightened out now, while I can still think.

If I set up the charitable trust--which is hard for me because it means less for my heirs--then I could just dole out what little bit it made a year.

And I am talking minimal.

But still, it would be nice to have it set up in advance of the time I won't be able to do something like that.

But I've also seen how much my folks are paying a month--currently it's about 10,000 but we looked at several places that would have been 20,000 for both--and I think, no hang on to every penny because I'll probably need it and use it. Ugh.

[iris lilies]

I added a couple of points to my #6 post.

A couple of useful things came out of this week’s discussion with DH.


For one thing, I got him to finish our net worth statement that we make once a year, a snapshot of where we stand on December 31 of each year. He had not finished it because he was waiting for a stock evaluation and this discussion caused him to get on the stick and finish it. And yet, he did not include the family farm as an asset, and when his father died DH became part-owner. Sigh. So I had to reiterate with him our asset list is what we own if we die today. Our asset list includes EVERYTHING in which we have financial interest.

Second thing, this got me moving to chart how much of our assets he “controls” and how much I “control”. I have absolute control and/or input into about 1/3. He has absolutely control, general control, and input into well over 2/3. This seems uneven to me, and I will be thinking about this for a while because
i want to take action. This balance will shift somewhat when we sell our city house—that $ will go i to a cash or CD account and I have joint control of those.

My nattering over the years about self-directed index investing vs our brokerage accounts cause him to pull out some comparison numbers that demonstrated, up thru 2019, , that our brokers may have done a better job than my self directed index fund. I am fine with not beating the stock market, but I will have to look at this carefully because now at least I have some data.

[Teacher Terry]

We of course give small amounts to charity regularly but nothing big because we may need it.

[Tybee]

I think it's great that you do the end of the year financial big picture and that you both are in on all the numbers. That is really good. We do ours more frequently than that but we are in flux trying to work out buying a new piece of real estate and what makes sense for us going forward, as we are trying to accomodate moving to be closer to family but I am unwilling to do that if it means our financial peril.

One thing to keep in mind is that his inheritance is not technically an "ours" item--it is completely his and his to control and use unless he decides to comingle it with your household money, shared money.

We definitely have his, hers, and ours money, and it is based on what we brought into the marriage, as it is a second marriage for both, and there are children involved.

So I am not advocating putting it all into one pot, but I am saying that you have to agree on how you are viewing the monies, and an inheritance is not a joint item unless you choose to make it so.

Edited to add: maybe what I just said is completely irrelevant to your situation; don't know. My mom was a lawyer and all my life, she grilled into me not to comingle inheritances. She will be 94 this summer and doesn't know my brothers sometimes but she knows what she inherited and that she did not comingle those funds!

[iris lilies]

Our “his, hers, and our” money is pretty much defined by the U.S. tax code for individual I.R.A.s and employer retirement account for one person.Those are all” his hers” And the rest of it is “ours.”

But I do hear you about the family farm inheritance and yes I know that it is his both legally and ethically, but if he dies it becomes part of his estate which is all willed to me, which is why I have some interest in it. I advise him from the sidelines about what he should do about the farm but of course he pays no attention to me ha ha.When I got a smallish inheritance from my mother I spent it on what I wanted, but much of that was for joint home improvements so he benefited.

I think you have mentioned the “ no commingling inheritance” idea before and I think I did tell DH that, for his own good in case of our divorce. In My ideal world he would sell his share of the farm and put it into a nice safe CD. I suppose that CD could have his name and only his name on it I would be OK with it,I just wanna make sure that that money is around if he dies.

[Teacher Terry]

When we got together I had money and he didn’t due to divorce. Up until a few weeks ago the house was in my name only as it’s my money. I changed that because I wanted him to have the house and then it will go to all our kids 5 ways. There have been many years he out earned me. I am not afraid of divorce. If I die first he could change the will but I trust not only him but my youngest step son that I raised. His oldest brother might try to have him declared incompetent and steal the money and house like he tried with his mom but
that step son won’t let it happen.