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1 May 2023

Can I Donate My Retirement Plan or HSA? 

If you’re planning for retirement, you may need to save more than you initially thought. According to a recent study, the savings expectations for a comfortable retirement increased from 2020 by 10 % to $1.04 million in 2021. Retirees will need a more significant nest egg to cover their expenses, healthcare costs, and other financial needs throughout their retirement years. While this may seem daunting, saving early and making a plan that works for your financial situation is essential. Doing so can help ensure you have the necessary resources to enjoy a comfortable and fulfilling retirement. 

Donating your retirement plan or HSA (Health Savings Account) can be a great way to support important causes while enjoying some tax benefits. Donating retirement plan assets can help you reduce your taxable income and lower your tax bill. This is because contributions to qualified charitable organizations are tax-deductible. Additionally, donating your retirement plan assets can help you fulfill your philanthropic goals and leave a legacy by supporting charitable causes you care about. Similarly, donating your HSA can provide tax benefits while supporting your favorite charity. You can use your HSA to pay for qualified medical expenses tax-free. If you present your HSA funds to a qualified charitable organization, you can also claim a tax deduction for the donation. Donating your retirement plan or HSA can be a win-win situation that benefits you and the charitable organizations you support.

How Can I Donate My Retirement Plan or HSA? 

There are a few ways to donate your retirement plan or Health Savings Account (HSA) to a charitable organization: 

  1. Designate a beneficiary: You can designate a charity as a beneficiary of your retirement plan or HSA. This means that upon your passing, the funds will be distributed to the charity. 
  2. Make a qualified charitable distribution (QCD): If you are 70 1/2 years or older, you can make a tax-free charitable donation of up to $100,000 per year from your IRA to a qualified charity. The QCD counts towards your required minimum distribution (RMD) and can help lower your taxable income. 
  3. Donate unused HSA funds: If you have new funds in your HSA, you can donate them to a qualified charitable organization. However, it’s important to note that you cannot claim a tax deduction for this type of donation. 

It’s essential to consult with a financial advisor or tax professional before donating your retirement plan or HSA to ensure you understand the potential tax implications and rules governing these types of donations. Better Accounting can help you donate your retirement plan, HSA, or other assets to a charitable organization in a tax-efficient manner. Their team of accounting professionals will ensure you donate these assets in a way that protects and benefits your overall financial strategy. 

Where Can I Learn More About Donating My Retirement Plan? 

 Additionally, Better Accounting can assist with setting up a charitable foundation or donor-advised fund to manage your charitable giving over time. This can allow you to make donations to multiple charities while receiving maximum tax benefits. Better Accounting can also provide ongoing support to ensure your donations are properly recorded and reported on your tax returns. This can help ensure that you follow IRS regulations and maximize your tax benefits. 

By working with Better Accounting, you can ensure that your charitable giving is managed in a way that is both financially beneficial for you and aligned with your philanthropic goals. 

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