I am still working but will have to take RMDs from my IRAs next year. So I really don;'t need the RMD money with the income from my practice and rental properties.
Believe it or not, between the medical expenses for the wife and I, plus my real estate taxes and charitable contributions, we have enough deductions to itemize on our 1040 every year.
Next year I will contribute at least $1000 a month to charities, mostly to my church. Someone advised that these contributions can be made directly from the IRAs and not incur any taxes.
But if I make contributions directly, I may not meet the threshold for itemizing my deductions. Is it more advantageous to contribute directly from the IRA, or must I do "what -if " scenarios with real-life numbers to make that decision?
I admire anyone who does their own taxes, especially when , like yours , they sound fairly complicated. I’m always surprised that many “Accountants” don’t do Taxes. I use an “Enrolled Agent” because I feel that’s all they do and are usually keyed in to the nuances of our ridiculous Tax Code through their “network”.
All that to say I don’t know “Jack” but here’s some things to think about.
RMDs are considered “Ordinary Income” added to your existing income and may push you into the next higher Tax Bracket and even if they don’t , you’re still paying your highest tax rate on them.
That higher income MAY also kick you into higher Medicare Premiums due to IRMAA (Income Related Monthly Adjusted Amount) which can be significant. (Annual surcharge Filing Jointly, $218k-$274k is $2300.00, it’s $4300.00 in the next Bracket and goes up from there). It operates on a two year “Look Back” for some reason so it’s also a surprise when it happens. Ask AI about it.
QCDs “QCDs (Qualified Charitable Distributions) from your IRA MAY keep you from falling into the next higher Tax Bracket and the IRMAA trap.
If you decide to go the QCD route make sure that your IRA Custodian makes the check out to the organization and not to you. Some Custodians mail the Checks directly to the Organization, others (Vanguard) mail the checks to you to forward to the Organization. Also make sure the organization is really a Nonprofit and has a Tax ID number. (Also known as an EIN). Save a copy of the check and Organization receipt for an IRS audit.
Also remember , this donation is NOT Tax Deductible, you just don’t pay Income Tax on it.
Again you need to talk to a professional but everything I read says that if you are a “Charitably Inclined Person” and subject to RMDs all future Giving should be as “QCDs” from your “RMDs” .
Thank you for being a Giver and Best Wishes
Thanks for you helpful reply. I had not considered high income increasing my Medicrap premiums. That is another important factor.
I have managed to keep my tax rate very low over most of my life, but I will get creamed in retirement as I am forced to liquidate IRAs and annuities. My income will likely triple in retirement. I saved too much and lived too frugally during my lifetime. Oh well, better to save too much rather than too little.
You give me too much credit. I have an accountant do my corporate returns, and a CPA friend do my personal 1040, but I prep things like Schedule E for him.
Also, I should be giving 3X more to charity than I do considering my income. But one never knows what curve balls life will throw, so I will probably wait until death to give most of it away to good causes- when I can’t deduct the gifts for income taxes! Guess another way would be to give to those charitable annuities where I could take the deductions now, and receive income for the rest of my life.
The financial decumulation phase is more complicated than the accumulation phase. Some individuals including myself have difficulty moving from a saving mindset to a spending mindset
Consider reading the Book Die with Zero by Bill Perkins. He discusses the advantages of doing charitable donations during your lifetime and increasing spending now before health issues may limit what you can do.
I found that getting input about my financial choices in retirement from an hourly financial advisor was extremely helpful. Also my understanding is that there is a new charitable tax deduction up to $2,000 for joint filers in 2026 for non-itemizers
You are right on target with your observations. All my life I have focused on increasing the value of my investments. It is very hard to change gears and watch the value shrink.
I( guess RMDs are a good idea, to make people like me spend down their earnings, at least to an extent. Trouble is, after living frugally all my life, I find expensive things do not really give me so much pleasure. The wife won’t let me buy a large harpsichord to put in the living room, so I spent some money upgrading my old-fashioned stereo system.