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Question for the Money Doctors

Question submitted on Mar 2, 2012.

Question

Can I make a gift to my son and daughter from my IRA without paying any Federal or state income taxes? Can this be part of the required minimum distribution amount? Would my son and daughter be exempt from paying any tax as well?

Answer

No. Unfortunately, you cannot make tax free gift to your children from your IRA. The withdrawal would be taxable to you and would indeed count toward satisfying your required minimum distribuiton amount. Depending on the amount of the gift, you may be required to file a gift tax return, so I would suggest checking with your tax advisor to make sure you meet those filing requirements.

Your children would not be subject to tax on receipt of the gift however.


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