Couples playing football

Football's Over-Time to Tackle Your IRA Tax Strategy

February 17, 2025
By Michael List, CFA, CFP®
Investment Management Officer

Now that football is over and golf hasn’t started yet, we have a small window to highlight several strategies IRA owners can use to lower taxes today and in the future.  Full disclosure, I am not a Certified Public Accountant, nor have I recently stayed at a Holiday Inn Express. 

Qualified Charitable Distributions (QCD)

The IRS allows individuals who are 70 ½ or older to make distributions (QCDs) directly out of their IRA to a qualified charity of their choice.  In 2025, the limits have been adjusted higher allowing total QCDs of $108,000.  The primary benefit of a QCD is helping the charity fulfill its mission, of course.  Another benefit is helping reduce tax liability.  QCDs can satisfy part or all of an IRA owner’s Required Minimum Distribution during the year.  QCDs also allow taxpayers to receive a charitable deduction even if they take the standard deduction rather than itemized deductions, as the QCD amount is not counted as “taxable income”. 

Prior Year Contributions to Traditional or Roth IRAs

The IRS allows workers to make contributions into their IRAs in early 2025 (until April 15) that can qualify for contributions for their 2024 tax year.    Traditional IRAs often allow for a current tax deduction on contributions and investment growth is tax-deferred until distributions are taken.  Roth IRAs receive after-tax contributions, so a contribution won’t reduce your taxes today, but investment growth and distributions are tax-free.  Tax deferred and tax-free growth make IRAs great vehicles to rebalance investments because trades don’t trigger capital gains tax nor taxes from interest and dividends.

The Back Door is Open  

Traditional and Roth IRAs have some unique rules for contribution and deduction limits including income caps and phaseouts. This is to limit who is allowed to receive the tax benefits for their contributions (I suspect it is really because the government loves paperwork).  The income limits apply to direct contributions but not to Roth conversions.  A worker, whom is over the income limit, can make an after-tax contribution into a traditional IRA and then immediately convert and move the money into his Roth IRA.  This is known as the backdoor Roth contribution and continues to be a strategy to add new money to Roth IRA accounts.

If you have any questions regarding contributions or distributions from your IRA reach out to your Advisor. Your financial security matters to us.

About the Author

Michael List, CFA, CFP®

Michael List is an Investment Management Officer within Security National's Wealth Management Division. Michael earned his Bachelor of Science in Business Administration with a concentration in Finance and Economics from Creighton University and holds the esteemed Chartered Financial Analyst (CFA) and Certified Financial Planner CFP® designations. List helps execute investment strategy, transactional execution and overall portfolio management at the Bank.