Ted, Could you use a RMD withdrawal to set up a donor advised fund and implement this same strategy to get an immediate tax deduction or is a RMD considered a tax deduction if given to an accredited charity so you wouldn’t have to setup a donor advised fund? Roger
There's a few ways to answer this. The optimal charity strategy for RMDs is the so-called "qualified charitable distribution" (or QCD). This reduces one's "above the line income" which is really helpful especially if you are in IRMAA territory. Alternatively, one could make a charitable gift to an organziation or donor advised fund (wouldn't matter which). The tax impact would be the same. The main issue is the charitable gift amount would need to be in-excess of the standard deduction (in-combo with other deductions) to gain a tax benefit. This turned into a rather technical answer. Bottom line is a QCD strategy is generally a better approach when it comes to RMDs.
Will it offset a Roth Conversion?
Ted,
Could you use a RMD withdrawal to set up a donor advised fund and implement this same strategy to get an immediate tax deduction or is a RMD considered a tax deduction if given to an accredited charity so you wouldn’t have to setup a donor advised fund?
Roger
There's a few ways to answer this. The optimal charity strategy for RMDs is the so-called "qualified charitable distribution" (or QCD). This reduces one's "above the line income" which is really helpful especially if you are in IRMAA territory. Alternatively, one could make a charitable gift to an organziation or donor advised fund (wouldn't matter which). The tax impact would be the same. The main issue is the charitable gift amount would need to be in-excess of the standard deduction (in-combo with other deductions) to gain a tax benefit. This turned into a rather technical answer. Bottom line is a QCD strategy is generally a better approach when it comes to RMDs.