How To The Reduce or Eliminate The Tax Consequences of a Required Minimum Distribution or RMD?

Barbara Davis, needed personal tax advice. She is 75, and has an annual income from social security, a pension and some IRA investments totaling $60,000 annually. She and her late husband also managed to save several hundred thousand dollars in non‐qualified CD’s, currently earning low rates. Her RMD’s are increasing each year, and she would like to pay less in taxes, and support several local charities.

The Tax Reduction Network suggested the following strategy as a way to support her favorite charitable work, have a future income, and create a way to re-characterize their qualified money without substantial tax consequences.

The Tax Reduction Network suggest the following strategy as a way to support their favorite charitable work, have a future income, and reduce the tax consequences of a Roth conversion.

Here’s how it worked:

1. Barbara transferred $100,000 from a variety of poorly performing non‐qualified assets to fund a TRN Strategy.

2. Mary received a $48,961 immediate income tax deduction which she can use against 50% of her AGI this year, with a potential 5 year carry‐forward.

3. The new TRN Strategy can provide for a structured inheritance for her children, OR she can turn on an additional income herself in future years.

4. Mary recommended her favorite charities to benefit immediately from her completed Legacy Strategy.


Current Market Value of Assets funding TRN Strategy $100,000
Immediate Charitable Income Tax Deduction $ 48,961
Tax Savings at Estimated 25% Tax Bracket $ 12,240
Annual Income Payments Beginning in 10 years $ 8,216
Total Payouts Over 15 Year Term Certain Payout $123,242

This is one just one way of reducing taxable income

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