By Linda Zelig
MnSF Development Manager

It’s probably no secret that this column almost writes itself. I sit, propping up my chin, pondering things a bit. Usually I’m thinking through which story to tell - there are so many. You are the folks with the marvelous experiences and I simply capture them here and spread the good news to our readership.

It happened again, one of those incredible stories that filtered into the office. It spread quickly and I get to relate it. Alice has a tax advisor. He called her a month ago and said, “Alice, you’re at an age where you need to take the RMD.”

“No, please, not another tedious medical scan,” pleaded Alice. Wait, you’re not my doctor, you’re my tax advisor. What are you talking about?”

“I’m talking about your Individual Retirement Account, Alice. Since you’re over 70 years of age, you will have to withdraw a required minimum distribution (RMD) from your retirement savings where your taxes have been deferred.”

“Well, what if I don’t need the money? What if I don’t want to pay taxes on any withdrawals? Can’t I just leave my account sit there until I’m ready to use it?”

The very wise tax advisor said, “This would not be a smart move. If you fail to withdraw the required minimum, you’ll get slapped with an excess accumulation tax.”

“Yikes, said Alice, how much is that?”

“Let me do a quick calculation here based on the value of your IRA and the corresponding distribution period. Well, the excess accumulation tax amounts to 50 percent of your RMD and your RMD amounts to $1,000 this year, so you can expect to pay $500 if you do nothing. And Alice, you’re in the 25 percent income tax bracket, so you’ll pay twice what you would have paid in taxes if you’d simply followed the RMD rule.”

It turns out that Alice is really good at math too. She also knew how to meet the required minimum distribution amount and avoid paying taxes on it by transferring it directly to an eligible charity if she does it by the end of 2007. And that’s exactly what she did! Alice called us at the Minnesota Senior Federation to give us the good news. A check from her IRA account followed and we’re dancing in the streets.

If you need more information about RMDs and charitable gifts from IRAs, several good websites will guide you through the requirements. They also display tables that will help you determine your own distribution based on age and corresponding distribution period. If Alice’ experience matches your situation, we hope you’ll think of the Minnesota Senior Federation as a means to satisfy the IRS regulations and your own personal goals for philanthropy. Put the Minnesota Senior Federation on your holiday giving list. Thousands of Minnesota seniors will thank you for it, if not find themselves dancing in the streets.

Contact me at 651/783-5006, 877/645-0261 ext. 5006 or .