Invest in Our National Security Through This Popular 2021 End of Year Tax Strategy

Sep 7, 2021

More and more, philanthropically minded retirees are using their IRAs to benefit charitable nonprofit institutions near and dear to them—nonprofits like the Naval War College Foundation (NWCF). As we enter the fourth quarter of calendar year 2021, it is important to know the rules to take advantage of opportunities which may lessen your tax burden.

Based on your age, a simple rollover of funds from your retirement account directly to the Naval War College Foundation counts toward your required IRA minimum distribution—the minimum amount you must withdraw from your IRA each year as set forth by the Internal Revenue Service. Specifically, “You cannot keep retirement funds in your account indefinitely. Generally, you must start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 70½. However, changes were made through the SECURE Act signed by President Trump on December 20, 2019. Due to changes made through this Act, if your 70th birthday is July 1, 2019 or later, you do not have to take withdrawals until you reach age 72. Roth IRAs do not require withdrawals until after the death of the owner. You can withdraw more than the minimum required amount.”

Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts). The minimum distribution rules apply to: traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), 457(b), profit sharing and other defined contribution plans.

Why choose an IRA rollover to assist the Naval War College Foundation in serving the U.S. Naval War College?

1. The amount you transfer to the NWCF counts towards your required minimum distribution;
2. The amount you transfer to the NWCF is not taxed as it would be if you personally took the distribution;
3. The amount you transfer to the NWCF becomes fully tax deductible because you have given it to a charity and thereby lessens your income.
4. Because investing philanthropically in the NWCF helps bolster and strengthen our national security now and in the future.

As always, please consult with your financial and legal planners to best understand any changes in the law and what strategies are best for you. Thank you!


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