July 21, 2024

Mandatory withdrawals from retirement funds can be donated to charity tax free

COLORADO SPRINGS, Colo. — Nonprofits have seen a dip in donations this year as many are having trouble meeting their end of year quotas.

Despite this, there is a way people can help while also receiving a tax break in the process. These nonprofits can benefit from what are called “required end-of-year distributions.”

For example, some people in their 70’s have to decide what to do with mandatory withdrawal from either their 401(k) funds, or from other retirements funds. They can then donate that money to a charity, which is tax free, so it’s a win-win.

News5 spoke with the National Alliance on Mental Illness (NAMI), a local nonprofit on Friday about the downturn in donations this year.

“Inflation has definitely impacted a lot of people pretty significantly,” said Kirk Woundy with NAMI. “I have seen some statistics that say there has been as much as a 30% drop in donations, related largely to inflation this year. So, yeah, nonprofits are scrambling to meet their year end goals.”

You have to act fast to take advantage of this tax break. Any distributions or gifts must be given before Sun. Dec. 31 to count for this year’s tax bill.

To learn more about the nonprofit, visit the National Alliance on Mental Illness Website.


Watch KOAA News5 on your time, anytime with our free streaming app available for your Roku, FireTV, AppleTV and Android TV. Just search KOAA News5, download and start watching.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent. View more