Gary W. Pelletier, CLU, ChFC, AIF®

Northeast Planning Associates, Inc.

Corporate, Estate

& Financial Planning


IRA Tips, Part I

| July 24, 2018
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The tax changes that went into effect this year have widespread implications.  It will take a while to see how these changes affect larger aspects of our financial system, like the impact on the Federal deficit and economic growth.  But we do know the immediate effects on some nuts and bolts issues like our 2018 tax returns, so we’ll focus on the implications of the 2017 Tax Cuts and Jobs Act on IRAs over the next two months.

While the tax changes increased the standard deduction to $12,000 single/$24,000 joint, several itemized deductions were reduced or eliminated, including Miscellaneous Deductions.  One item in this category was investment management fees.  Before this change, it was sometimes recommended to pay any investment management fees for IRAs from outside the IRA in order to deduct it.  Going forward, it may make more sense to pay any Traditional IRA investment management fees from the IRA itself. Since this money was not taxed when it was deposited, paying the fee from here essentially locks in that tax deferral. 

Additionally, the new standard deduction may eliminate the tax-effectiveness of charitable donations.   If you are required to take a minimum distribution from your IRA(s) and are looking to give to charity, consider gifting all or a portion of the distribution directly to a charity.  This will help satisfy your requirement and remove the amount sent to charity from income.  Unfortunately this strategy is only available for those 70½ or older and the gift must be made directly from the IRA(s) to the charity; it cannot be sent to you first.  The charity must also be a registered 501(c)(3) to be considered a Qualified Charitable Distribution (QCD).  The maximum amount of a QCD is $100,000 per year.

Content in this material is for general information only and not intended to provide specific financial, tax, or legal advice or recommendations for any individual. We suggest that you discuss your specific situation with a qualified professional prior to making any financial decision.

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