A Checking Account with a Difference

BY STEVE DINNEN
A friend was showing off his new checkbook. Big deal, I thought; you’re 70-some years old and are just now settling down with a bank account?
This was no ordinary checking account, however, but one tied to his IRA account. So, rather than request a disbursement from his IRA, and wait for a check to arrive, or an electronic money transfer to take hold, he could just write a darn check immediately.
The beauty of this lay in his ability to write a check not only to himself but to any charity or nonprofit organization. As you likely know, once you reach age 70-1/2, you must take distributions from an Individual Retirement Account. That is a taxable event, because the government gave you a tax break when the money went into the account, and now it wants its taxes paid.
You can beat the IRS if you ship money from your IRA directly to a qualifying charity (including churches); that qualifies as a distribution and it’s tax free. It’s a bit clunky, however, to contact the IRA account holder and ask them to issue a payment. With an IRA checking account, you skip that procedure and write the check directly.
Good going, friend, with the new checkbook.
  • Show Comments (0)

Your email address will not be published.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

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

You May Also Like

College Savings Plan Is Worth a Look

BY STEVE DINNENIt’s National College Savings Month (and it’s also National Trucker Appreciation Month). ...

Bunch Your Donations Together to Claim Tax Deduction

BY STEVE DINNENThe new tax reform law could put a crimp on charitable giving. ...

Be Like Bill: Read to Learn This Summer

BY STEVE DINNENWhen you head to the beach or pool this summer, you’ll want ...

Let dsmWeekly deliver news directly to your inbox.