Some charity donors may score a bigger write-off with retirement account funds

  • by:
  • Source: CNBC
  • 07/21/2021
The pandemic sparked charitable giving among wealthy families, and some who are eager to give more may score a bigger 2021 write-off by leveraging money from pretax retirement accounts. 

Here’s how it works: Certain retirees with excess pretax retirement savings — meaning they’ve saved more than they expect they’ll need — may withdraw the funds and donate the cash to a qualified charity. There are taxes on the distribution, but retirees may offset some levies with a higher charitable deduction.

Donors may claim a tax break of up to 100% of their adjusted gross income for cash donations in 2021, a CARES Act measure meant to boost charitable giving during the pandemic. 

However, they must itemize deductions to claim the write-off, meaning their total tax breaks exceed the standard deduction, which is $12,550 for individuals and $25,100 for married couples filing together for 2021.
Person using laptop by Rawpixel Ltd is licensed under Attribution 2.0 Generic (CC BY 2.0)

Get latest news delivered daily!

We will send you breaking news right to your inbox