Perhaps you'd like to help your daughter buy her first home. Or you might want to help with your grandchildren's college tuition. Giving gifts to family can be very gratifying — especially if you plan wisely. One strategy to consider is to use gifts to help satisfy your minimum IRA distribution requirement.
In the case of Traditional IRAs, the federal government requires you to begin taking minimum distributions by age 70 1/2;. (Roth IRAs are not subject to the minimum distribution requirement.) Using an IRA Distribution Calculator like the one from Bankrate, you can quickly determine your minimum required distribution by entering your IRA account balance and your birth date. IRA Distribution Calculators take into account IRS rules and life expectancy tables to help determine your minimum required distribution each year.
Take Advantage of The Gift Tax Exclusion.
If your minimum required distributions exceed your needs, then gifting the extra funds might be an option that works for you. The IRS allows you to provide gifts of up to $13,000 per calendar year to any individual without incurring a gift tax. Your spouse can give a like sum. For instance, according to the IRS, with this gift tax exclusion, a married couple could give each child (or any other individual) $26,000 per calendar year.
As you can see, an IRA Distribution Calculator is an excellent tool to help you plan your retirement.
Ally Bank can help you plan, too, with our selection of Individual Retirement Accounts offering interest rates consistently among the most competitive in the country. It's a simple process to rollover any existing IRA accounts, and continue to make annual contributions, too. Visit Allybank.com to learn more. Or speak live with a knowledgeable Ally Bank Customer Care Associate anytime, 24/7 at 877-247-ALLY (2559) and consult with your tax professional.