Qualified Charitable Distributions For People Over 70 1/2

Thanks to the Tax Cut and Jobs Act’s higher standard deduction, fewer taxpayers are itemizing on their tax returns. A negative side effect is that taxpayers are unable to utilize the deduction for donations made to a qualified charity. One way around this situation is with a qualified charitable distribution (QCD). Taxpayers age 70 ½ and older can make a qualified charitable distribution from an IRA by donating up to $100,000 annually directly to an eligible charity without counting the distribution as taxable income. The result is lower taxes for people who cannot itemize anymore. Another benefit of the QCD is that it can help keep your Medicare premiums lower because it lowers your taxable

Key Provisions From The SECURE Act

The SECURE Act (Setting Every Community Up for Retirement Enhancement) was passed and signed into law by the President. The new law includes various provisions designed to make saving for retirement easier for Americans. The following are few noteworthy changes effective January 1, 2020. The age for required minimum distributions from qualified retirement accounts (ex. 401ks and IRAs) will increase from 70 1/2 to 72. The new law also repeals the rule that does not allow IRA contributions by people over age 70 1/2. Beneficiaries of qualified accounts must distribute the entire balance by the end of the 10th calendar year following the year of the death of the account owner. The new rule does

2020 Contribution Limits

The Internal Revenue Service announced higher retirement plan contribution limits for 2020. The amount employees are eligible to contribute to a 401k or 403b plan will increase from the annual limit of $19,000 in 2019 to $19,500 in 2020. The catch-up contribution limit for people age 50 and older will increase from $6,000 to $6,500 next year. Employee contribution limits to a SIMPLE plan will increase from $13,000 to $13,500 per year. One item that did not change is the annual limit for contributions to a Traditional or Roth IRA account. Annual contribution limits will remain at the 2019 level of $6,000 contribution and $1,000 catch-up. Additional details regarding 2020 updates can be found

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