News Column

Randy Siller: IRA Tax Breaks Could Prove Boon to Seniors

Jan 23 2013 12:00AM



NEW YORK, NY -- (Marketwire) -- 01/23/13 -- Much fuss was made over the ongoing Capitol Hill negotiations surrounding the so-called "fiscal cliff" -- and yet, for many Americans, the eventual resolutions of the fiscal cliff talks remain somewhat ambiguous. According to a recent CBS News report, however, one of the provisions of the fiscal cliff legislation could prove beneficial to seniors, allowing them to receive tax breaks by contributing part of their IRAs to charitable organizations. This provision has won the attention of financial planner Randy Siller, who has weighed in with his own statement to the press.

"The American Taxpayer Relief Act just reinstated a provision that allows those taking required minimum distributions from IRAs (which is required starting April following the year in which an individual turns age 70 1/2) to save taxes while donating up to $100,000 to a qualified charity," comments Siller, explaining this legislation in his new press statement. "The law was reinstated for 2012 and 2013."

Continues Siller, "The reinstatement for 2012 allows distributions made in December 2012 to be sent as a cash contribution to a qualified charity by January 31, 2013. For 2013, the normal method of having the IRA custodian send a certain sum directly to the charity should be used."

For many individuals, Randy Siller says, this provision could prove very advantageous. "The advantage to what is known as a 'Charitable IRA Rollover' is that the amount is not included in a taxpayer's Adjusted Gross Income (AGI). Now some might be thinking that, if they don't use this approach they could simply include the amount distributed from the IRA in their income and then, by contributing that amount to charity, obtain an offsetting itemized deduction. So why does excluding it from the taxpayer's AGI save money?"

The answer to this question, Siller says, depends on the taxpayer's unique situation. There are three scenarios in which taking advantage of this legal provision makes sense. "First, under the new tax law, there are limitations on personal exemptions and itemized deductions for couples with income above $300,000 and singles above $250,000. So, if including the distribution in income would put you over the limit, the Charitable IRA Rollover would save you taxes," explains Siller. "If you are already over the limit, then you would not get a full charitable deduction, in which case the Charitable IRA Rollover could save substantial taxes."

Siller highlights a second scenario in which the Rollover makes sense. "For those who take the standard deduction, as it is larger than the total of their itemized deductions, the Charitable IRA Rollover makes sense because there will be no offsetting charitable deduction if the Rollover approach is not taken."

Siller points to one further scenario. "Finally, by not including the distribution, in income it may lower the amount of taxable Social Security benefits," he remarks.

For Randy Siller, the implication of this legislation is simple. "For many taxpayers the reinstatement of the Charitable IRA rollover will provide a welcome benefit," he opines.


Randy Siller is a veteran of the financial services, and a founding partner of the firm Siller & Cohen. For more than two decades, the firm has offered financial planning and legal services to families, individuals, and businesses across the country. Randy Siller has been cited in numerous publications, including Time and Fortune.

Randy Siller is a registered representative of Lincoln Financial Advisors Corp. Securities and advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Siller and Cohen is not an affiliate of Lincoln Financial Advisors Corp does not provide legal or tax advice. CRN 201301-2076067

Source: Marketwire