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Smart Retirement Planning: A Charitable Approach to Avoiding Taxes on Gold

Smart Retirement Planning: A Charitable Approach to Avoiding Taxes on Gold


A tax-smart way to invest in physical gold is to place the gold bars or coins into a self-directed Individual Retirement Account (IRA). That will defer taxes on your gains. Now there’s a second step that charitably-minded investors can take to entirely avoid any taxes on their gold profits.

Under the Secure 2.0 Act of 2022, older Americans can satisfy the IRS’ annual required minimum distribution from IRAs by transferring funds directly from their IRA to a charitable organization, a tax strategy known as a qualified charitable distribution (QCD).

Normally, distributions from traditional IRAs are taxed in the year that funds are withdrawn. The Internal Revenue Service requires Americans to begin taking annual distributions when they turn 73. People who inherit IRAs must begin taking requirement minimum distributions in the year they begin receiving their inheritance.

By directly donating the distribution, donors are able to avoid all taxes while supporting their favorite charitable cause. Those who can afford it are permitted to donate up to $100,000 a year in qualified charitable distributions from an IRA, meaning a couple could donate up to $200,000.

This strategy makes it possible to accumulate substantial wealth by investing in gold and never pay taxes on the profits, as long as one is charitably minded and able to afford to make substantial donations. The strategy is especially savvy because gold is taxed as a collectible, meaning profits can incur a federal tax of up 28 percent.

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