Rescissions Act of 2025 (HR 4) – A rescission bill cancels funding previously approved by Congress upon request by the president. Congress has 45 continuous legislative days to enact or reject the proposal, during which time the funds may be temporarily withheld. Introduced by Rep. Steve Scalise (R-LA) on June 6, the House passed this bill on June 12 and the Senate passed it on July 17. Signed into law on July 24, this bill cancels nearly $9 billion in funding for a variety of programs, including foreign aid and the Corporation for Public Broadcasting.
Filing Relief for Natural Disasters Act (HR 517) – On July 24, the president signed into law this bill that allows taxpayers to postpone their filings if their state governor has declared a natural disaster, rather than waiting for the president to declare a federal disaster. The bill was introduced by Rep. David Kustoff on Jan. 16, passed in the House on March 31 and in the Senate on July 10.
Maintaining American Superiority by Improving Export Control Transparency Act (HR 1316) – Introduced by Rep. Ronny Jackson (R-TX) on Feb. 13, this legislation is designed to crack down on U.S. adversaries acquiring cutting-edge technology. The bill mandates that the Secretary of Commerce submit an annual report to Congress detailing dual-use export license applications and other requests for authorization for the export, re-export, release and in-country transfer of controlled items to arms-embargoed countries such as China, Russia, Iran and North Korea. The legislation was passed in the House on May 5, the Senate on May 22 and was signed into law on Aug. 19.
PRO Veterans Act of 2025 (S 423) – The purpose of this act is to prevent fraud and abuse via increased oversight of the Veterans Affairs Department, including critical skill bonuses paid out to senior executives. Moreover, the bill requires quarterly, in-person briefings to congressional veterans’ committees regarding VA departmental budget shortfalls. The legislation was introduced by Sen. Dan Sullivan (R-AK) on Feb. 5, passed in the Senate on April 8 and in the House on July 21. The bill was enacted on Aug. 19.
VA Home Loan Program Reform Act (HR 1815) – This bill was introduced on March 3 by Rep. Derrick Van Orden (R-WI), passed in the House on May 19, the Senate on July 15, and signed into law on July 30. The law reauthorizes the VA home loan partial claim and Veterans Affairs Servicing Purchase (VASP) programs. These programs are designed to help distressed veteran homeowners avoid foreclosure by enabling the VA to purchase a portion of indebtedness (25 percent to 30 percent of the unpaid principal balance) of a VA home loan secured by the primary residence of the borrower.
Improving Veterans’ Experience Act of 2025 (S 264) – This bill is meant to improve satisfaction with VA benefits and services by compiling feedback from veterans, families and caregivers. This legislation establishes a Veterans Experience Office (VEO) to manage customer experience initiatives, collect data and coordinate VA departments in order to prevent duplicate efforts and ensure consistent improvements across the board. The bill was introduced on Jan. 28 by Sen. Angus King (I-ME), passed in the Senate on April 8, the House on July 21 and was enacted on Aug. 14.
ACES Act of 2025 (S 201) – This act was introduced by Sen. Mark Kelly (D-AZ) on Jan. 23. It directs the secretary of the VA to study cancer and mortality rates among aviators and aircrews who served in the Navy, Air Force and Marine Corps; and to correlate incidents of cancer among this select group of military personnel. The legislation passed in the Senate on June 3, the House on July 21, and was signed by the president on Aug. 14.
Canceling Government Funding and Expanding Protections for Veterans
September 1, 2025 · Blog, Congress at Work, Uncategorized
⏱ 3 min read
Rescissions Act of 2025 (HR 4) – A rescission bill cancels funding previously approved by Congress upon request by the president. Congress has 45 continuous legislative days to enact or reject the proposal, during which time the funds may be temporarily withheld. Introduced by Rep. Steve Scalise (R-LA) on June 6, the House passed this bill on June 12 and the Senate passed it on July 17. Signed into law on July 24, this bill cancels nearly $9 billion in funding for a variety of programs, including foreign aid and the Corporation for Public Broadcasting.
Filing Relief for Natural Disasters Act (HR 517) – On July 24, the president signed into law this bill that allows taxpayers to postpone their filings if their state governor has declared a natural disaster, rather than waiting for the president to declare a federal disaster. The bill was introduced by Rep. David Kustoff on Jan. 16, passed in the House on March 31 and in the Senate on July 10.
Maintaining American Superiority by Improving Export Control Transparency Act (HR 1316) – Introduced by Rep. Ronny Jackson (R-TX) on Feb. 13, this legislation is designed to crack down on U.S. adversaries acquiring cutting-edge technology. The bill mandates that the Secretary of Commerce submit an annual report to Congress detailing dual-use export license applications and other requests for authorization for the export, re-export, release and in-country transfer of controlled items to arms-embargoed countries such as China, Russia, Iran and North Korea. The legislation was passed in the House on May 5, the Senate on May 22 and was signed into law on Aug. 19.
PRO Veterans Act of 2025 (S 423) – The purpose of this act is to prevent fraud and abuse via increased oversight of the Veterans Affairs Department, including critical skill bonuses paid out to senior executives. Moreover, the bill requires quarterly, in-person briefings to congressional veterans’ committees regarding VA departmental budget shortfalls. The legislation was introduced by Sen. Dan Sullivan (R-AK) on Feb. 5, passed in the Senate on April 8 and in the House on July 21. The bill was enacted on Aug. 19.
VA Home Loan Program Reform Act (HR 1815) – This bill was introduced on March 3 by Rep. Derrick Van Orden (R-WI), passed in the House on May 19, the Senate on July 15, and signed into law on July 30. The law reauthorizes the VA home loan partial claim and Veterans Affairs Servicing Purchase (VASP) programs. These programs are designed to help distressed veteran homeowners avoid foreclosure by enabling the VA to purchase a portion of indebtedness (25 percent to 30 percent of the unpaid principal balance) of a VA home loan secured by the primary residence of the borrower.
Improving Veterans’ Experience Act of 2025 (S 264) – This bill is meant to improve satisfaction with VA benefits and services by compiling feedback from veterans, families and caregivers. This legislation establishes a Veterans Experience Office (VEO) to manage customer experience initiatives, collect data and coordinate VA departments in order to prevent duplicate efforts and ensure consistent improvements across the board. The bill was introduced on Jan. 28 by Sen. Angus King (I-ME), passed in the Senate on April 8, the House on July 21 and was enacted on Aug. 14.
ACES Act of 2025 (S 201) – This act was introduced by Sen. Mark Kelly (D-AZ) on Jan. 23. It directs the secretary of the VA to study cancer and mortality rates among aviators and aircrews who served in the Navy, Air Force and Marine Corps; and to correlate incidents of cancer among this select group of military personnel. The legislation passed in the Senate on June 3, the House on July 21, and was signed by the president on Aug. 14.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Not everyone can make large charitable contributions. But there are ways to be charitable without spending your discretionary income while at the same time lowering your tax bill. Even those who can make large donations benefit from the tax advantages of a cashless donation. The following are ideas for cashless contributions to causes you are passionate about.
Tax Rules
The main thing to remember is that charities are not required to pay taxes on donations (cashless or otherwise). This can make your donation more valuable to them than it would be to you. Note, too, that if your itemized deductions are below the Standard Deduction for your tax filing status, gifting a high-value asset can put you over that cap and provide substantial savings on your tax bill.
The IRS sets limits on deductions for non-cash donations. Contributions of appreciated long-term assets such as stocks or real estate are subject to a limit of 30 percent of adjusted gross income, while other types of non-cash property donations have a 50 percent limit. Cash donations, on the other hand, have a higher limit at 60 percent of AGI. Even so, if the value of the contribution is higher than your deduction limit, you may carry over the excess for up to five years, subject to those same AGI limitations.
Non-cash donations are particularly beneficial for donors in a year they receive a windfall or unexpectedly high income.
Securities
If you own highly appreciated stock, you can donate it to a 501(c)(3) charity and claim the fair market value as a tax deduction. You won’t have to pay taxes on the earnings because you gifted them, nor will the charity once the stock is liquidated for its needs. Consider gifting stock to a charity when you rebalance your portfolio to both reduce the potential tax bill on earnings and reposition the overall portfolio to your target allocation.
Equity Compensation
You may have received employer company stock as a bonus or through an Employee Stock Purchase Plan (ESPP). Consider transferring one or more shares to a charity as a donation. Note that with ESPP shares, you need to have held them for more than two years from the grant date and one year from the purchase date to optimize your tax deduction.
Qualified Charitable Distribution
Traditional IRA owners are required to begin taking an annual minimum distribution (RMD) starting at a specific age. As of 2025, the rules are:
72 if born before Jan. 1, 1951
73 if born between Jan. 1, 1951, and Dec. 31, 1959
75 if born on or after Jan. 1, 1960
However, some people may still be working or have a high income for which RMDs place them in a higher tax bracket. What they can do is make a qualified charitable distribution (QCD) up to $100,000,so that all or a portion of their RMD is sent directly to the charity of their choice. While this tactic does not offer a tax deduction, it does satisfy the IRA owner’s RMD requirement, which essentially reduces their income tax burden.
Real Estate
If you purchased or inherited a piece of property, be it a residential home, undeveloped land, a commercial building or rental property, there are benefits to granting it as a cashless charitable donation. The strategy is best optimized if you’ve owned the property for more than one year, enabling you to avoid capital gains taxes and claim a fair market value charitable deduction for the tax year of the gift.
Automobile
Perhaps you have a spare car you never drive but continue to maintain and insure. Instead, consider donating it to a charity. First, ensure that the charity of your choice will accept a vehicle donation. In some cases, a charity may not even require that the car be in working condition, as it may sell or auction it to raise cash. While most charities will arrange to have the automobile picked up, you will need to remove the license plates and sign over the car title to the organization. You can determine the fair market value (to claim as a tax deduction) by researching pricing guides like Kelly Blue Book or Edmunds.
Collectibles/Art
Some folks collect or inherit items they don’t want anymore. Instead of selling them on Facebook, consider donating them to a charity. First, establish a value for the item(s); for items worth more than $5,000,you’ll need to get a qualified appraisal to determine your tax deduction. Also, make sure the charity of your choice will accept the collectible.
Life Insurance
For an individual who no longer needs their permanent life insurance policy, transferring policy ownership to a charity may be more advantageous than surrendering it and paying taxes on the policy’s appreciation. Donating the policy eliminates your tax liability and qualifies for a deduction. The deduction is the lesser of the policy’s cash value or the cost basis (i.e., premiums paid to date).
Another option is to simply change the beneficiary on your life policy to the charity you choose. You won’t receive a tax deduction until the policy pays out after your death, at which point your estate can claim it.
Time
Don’t forget that in many cases you can donate your time instead of money. Seek out charities that need volunteers, from specific skills and expertise to help with cleaning, delivering, and organizing events.
Cashless Charitable Contributions
September 1, 2025 · Blog, Financial Planning
⏱ 5 min read
Not everyone can make large charitable contributions. But there are ways to be charitable without spending your discretionary income while at the same time lowering your tax bill. Even those who can make large donations benefit from the tax advantages of a cashless donation. The following are ideas for cashless contributions to causes you are passionate about.
Tax Rules
The main thing to remember is that charities are not required to pay taxes on donations (cashless or otherwise). This can make your donation more valuable to them than it would be to you. Note, too, that if your itemized deductions are below the Standard Deduction for your tax filing status, gifting a high-value asset can put you over that cap and provide substantial savings on your tax bill.
The IRS sets limits on deductions for non-cash donations. Contributions of appreciated long-term assets such as stocks or real estate are subject to a limit of 30 percent of adjusted gross income, while other types of non-cash property donations have a 50 percent limit. Cash donations, on the other hand, have a higher limit at 60 percent of AGI. Even so, if the value of the contribution is higher than your deduction limit, you may carry over the excess for up to five years, subject to those same AGI limitations.
Non-cash donations are particularly beneficial for donors in a year they receive a windfall or unexpectedly high income.
Securities
If you own highly appreciated stock, you can donate it to a 501(c)(3) charity and claim the fair market value as a tax deduction. You won’t have to pay taxes on the earnings because you gifted them, nor will the charity once the stock is liquidated for its needs. Consider gifting stock to a charity when you rebalance your portfolio to both reduce the potential tax bill on earnings and reposition the overall portfolio to your target allocation.
Equity Compensation
You may have received employer company stock as a bonus or through an Employee Stock Purchase Plan (ESPP). Consider transferring one or more shares to a charity as a donation. Note that with ESPP shares, you need to have held them for more than two years from the grant date and one year from the purchase date to optimize your tax deduction.
Qualified Charitable Distribution
Traditional IRA owners are required to begin taking an annual minimum distribution (RMD) starting at a specific age. As of 2025, the rules are:
72 if born before Jan. 1, 1951
73 if born between Jan. 1, 1951, and Dec. 31, 1959
75 if born on or after Jan. 1, 1960
However, some people may still be working or have a high income for which RMDs place them in a higher tax bracket. What they can do is make a qualified charitable distribution (QCD) up to $100,000,so that all or a portion of their RMD is sent directly to the charity of their choice. While this tactic does not offer a tax deduction, it does satisfy the IRA owner’s RMD requirement, which essentially reduces their income tax burden.
Real Estate
If you purchased or inherited a piece of property, be it a residential home, undeveloped land, a commercial building or rental property, there are benefits to granting it as a cashless charitable donation. The strategy is best optimized if you’ve owned the property for more than one year, enabling you to avoid capital gains taxes and claim a fair market value charitable deduction for the tax year of the gift.
Automobile
Perhaps you have a spare car you never drive but continue to maintain and insure. Instead, consider donating it to a charity. First, ensure that the charity of your choice will accept a vehicle donation. In some cases, a charity may not even require that the car be in working condition, as it may sell or auction it to raise cash. While most charities will arrange to have the automobile picked up, you will need to remove the license plates and sign over the car title to the organization. You can determine the fair market value (to claim as a tax deduction) by researching pricing guides like Kelly Blue Book or Edmunds.
Collectibles/Art
Some folks collect or inherit items they don’t want anymore. Instead of selling them on Facebook, consider donating them to a charity. First, establish a value for the item(s); for items worth more than $5,000,you’ll need to get a qualified appraisal to determine your tax deduction. Also, make sure the charity of your choice will accept the collectible.
Life Insurance
For an individual who no longer needs their permanent life insurance policy, transferring policy ownership to a charity may be more advantageous than surrendering it and paying taxes on the policy’s appreciation. Donating the policy eliminates your tax liability and qualifies for a deduction. The deduction is the lesser of the policy’s cash value or the cost basis (i.e., premiums paid to date).
Another option is to simply change the beneficiary on your life policy to the charity you choose. You won’t receive a tax deduction until the policy pays out after your death, at which point your estate can claim it.
Time
Don’t forget that in many cases you can donate your time instead of money. Seek out charities that need volunteers, from specific skills and expertise to help with cleaning, delivering, and organizing events.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Based on statistics from the World Bank, the United States government spent 3.59 percent of its 2022 gross domestic product on research and development. While private businesses spend on their own research and development costs, it’s important for businesses to treat these expenditures appropriately.
When it comes to research and development outlays, U.S. Generally Accepted Accounting Principles (GAAP) dictate that businesses must expense them during the identical fiscal year as they’re consumed. Accordingly, this creates difficulties for investors and business owners alike in two ways. The first is more uncertain profitability and loss projections. The second is a murkier ability to quantify their rates of return on assets and investments.
If R&D capitalization is minimal or non-existent by a company, it can imply the business’ total assets (or its total invested capital) doesn’t accurately represent how much has been put into such assets. This will affect the business’ Return on Assets (ROA) and Return on Invested Capital (ROIC). This illustrates the importance in differences of how businesses treat their R&D expenses – using the balance sheet to capitalize and the income statement to expense.
Accounting Standards
Per International Financial Reporting Standards (IFRS), research outlays are classified as expenses annually, like GAAP. However, development costs may be capitalized for businesses with assets under incubation for saleable purposes (in other words, the tech/IP is expected to be approved and produce revenue in the future).
One consideration with IFRS is that a portion of research and development costs may be capitalized or recorded as an asset on the business’ balance sheet, instead of classified as an expense on the Profit and Loss Statement. It’s important, though, to understand that judgment is in the eye of the classification as to how commercially viable a product or service will be in the future, potentially causing issues on the company’s financial statements. Since research and development is sporadic, it impacts a business’ profitability. It’s seen in certain sectors, such as consumer discretionary, healthcare, and technology, to highlight a few.
With revenue, cash flow, and profit expected from the long-term investment of research and development, for products or services with a realistic chance, it should be capitalized and not expensed. Investors need to be aware of the differences in how businesses capitalize or expense their research and development spending, since, without additional financial analysis, it’s important to factor in research and development equally. This is because companies that don’t capitalize experience more unstable earnings.
Exploring Capitalization Versus Expensing
To determine the value and to capitalize such assets, analysts must project the asset’s lifespan to produce benefits (over its economic life) and go with that projection for the amortization period.
Amortization life varies between assets and is based on the economic life of the particular asset. Ways to determine the economic life depend on both the asset’s patentability and/or salability. If there’s a pharmaceutical drug with a 20-year patent, it’ll likely have a much longer life than the next mobile device or graphic processing unit (GPU).
Assuming an asset has a life of six years, the business would amortize equally over the six-year time frame. There can be a multitude of amortization approaches, but the straight-line method is used for the capitalized research and development expenses. It assumes the following figures:
$200,000 spent on R&D
$40,000 residual value
Based on the difference of $160,000 and the six-year economic life, each year would result in approximately $26,666 in amortization expense. After six years, the resulting value would be $40,000 in residual value.
Conclusion
Understanding the importance of accounting for R&D outlays is helpful for businesses to maximize investments for competitiveness and financial compliance.
Capitalizing Versus Expensing Research and Development
September 1, 2025 · Accounting News, Blog, Uncategorized
⏱ 4 min read
Based on statistics from the World Bank, the United States government spent 3.59 percent of its 2022 gross domestic product on research and development. While private businesses spend on their own research and development costs, it’s important for businesses to treat these expenditures appropriately.
When it comes to research and development outlays, U.S. Generally Accepted Accounting Principles (GAAP) dictate that businesses must expense them during the identical fiscal year as they’re consumed. Accordingly, this creates difficulties for investors and business owners alike in two ways. The first is more uncertain profitability and loss projections. The second is a murkier ability to quantify their rates of return on assets and investments.
If R&D capitalization is minimal or non-existent by a company, it can imply the business’ total assets (or its total invested capital) doesn’t accurately represent how much has been put into such assets. This will affect the business’ Return on Assets (ROA) and Return on Invested Capital (ROIC). This illustrates the importance in differences of how businesses treat their R&D expenses – using the balance sheet to capitalize and the income statement to expense.
Accounting Standards
Per International Financial Reporting Standards (IFRS), research outlays are classified as expenses annually, like GAAP. However, development costs may be capitalized for businesses with assets under incubation for saleable purposes (in other words, the tech/IP is expected to be approved and produce revenue in the future).
One consideration with IFRS is that a portion of research and development costs may be capitalized or recorded as an asset on the business’ balance sheet, instead of classified as an expense on the Profit and Loss Statement. It’s important, though, to understand that judgment is in the eye of the classification as to how commercially viable a product or service will be in the future, potentially causing issues on the company’s financial statements. Since research and development is sporadic, it impacts a business’ profitability. It’s seen in certain sectors, such as consumer discretionary, healthcare, and technology, to highlight a few.
With revenue, cash flow, and profit expected from the long-term investment of research and development, for products or services with a realistic chance, it should be capitalized and not expensed. Investors need to be aware of the differences in how businesses capitalize or expense their research and development spending, since, without additional financial analysis, it’s important to factor in research and development equally. This is because companies that don’t capitalize experience more unstable earnings.
Exploring Capitalization Versus Expensing
To determine the value and to capitalize such assets, analysts must project the asset’s lifespan to produce benefits (over its economic life) and go with that projection for the amortization period.
Amortization life varies between assets and is based on the economic life of the particular asset. Ways to determine the economic life depend on both the asset’s patentability and/or salability. If there’s a pharmaceutical drug with a 20-year patent, it’ll likely have a much longer life than the next mobile device or graphic processing unit (GPU).
Assuming an asset has a life of six years, the business would amortize equally over the six-year time frame. There can be a multitude of amortization approaches, but the straight-line method is used for the capitalized research and development expenses. It assumes the following figures:
$200,000 spent on R&D
$40,000 residual value
Based on the difference of $160,000 and the six-year economic life, each year would result in approximately $26,666 in amortization expense. After six years, the resulting value would be $40,000 in residual value.
Conclusion
Understanding the importance of accounting for R&D outlays is helpful for businesses to maximize investments for competitiveness and financial compliance.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Required minimum distributions (RMDs) from traditional IRAs and 401(k)s often become a significant tax burden during retirement. As the percentage of your IRA that must be distributed increases each year, many retirees face higher adjusted gross income and increased exposure to stealth taxes. However, with strategic planning, you can transform RMDs from burdens into opportunities.
Timing Your First RMD
The RMD starting age has changed recently: age 72 for those born before 1951, age 73 for those born 1951-1959, and age 75 for those born in 1960 or later. Your first RMD must be taken by April 1 of the year following when you reach the required age.
While you can delay your first RMD until early the following year, most taxpayers should take it in the year they reach the required age. Delaying means you’ll take two RMDs in one calendar year – your delayed first RMD plus that year’s current RMD – potentially pushing you into higher tax brackets and increasing stealth taxes.
Managing Multiple IRAs
If you own several traditional IRAs, you have valuable flexibility under the aggregation rules. First, calculate the RMD for each IRA separately. Then, you can either take distributions from each IRA individually or combine all RMDs and withdraw the total amount from your IRAs in any ratio you choose, even taking the entire amount from just one account.
This flexibility allows you to rebalance your portfolio, draw down smaller accounts, or meet other financial goals. Just ensure that by December 31, your total distributions equal or exceed the aggregate RMD. Note that inherited IRAs and employer plans like 401(k)s cannot be aggregated and must have their RMDs calculated and taken separately.
Charitable Giving Strategy
One of the most tax-efficient strategies is using qualified charitable distributions (QCDs). If you’re over 70½ and make charitable gifts, taking your RMD as a QCD can reduce your taxable income while satisfying the distribution requirement. This strategy often provides better tax benefits than taking a distribution and then making a separate charitable deduction.
Account Structure Optimization
The tax law allows you to consolidate or split IRAs without tax consequences using direct trustee-to-trustee transfers. Some people prefer multiple IRAs for beneficiary planning, different investment strategies or to keep 401(k) rollover money separate. Others find multiple accounts harder to manage and worry about unequal performance affecting beneficiaries differently.
Consider your specific situation: if you have a qualified longevity annuity contract (QLAC) that delays RMDs until age 85, managing it in a separate IRA might be easier.
In-Kind Distributions
You don’t need to sell assets to generate cash for RMDs. Instead, you can make in-kind distributions by transferring securities directly from your IRA to a taxable account. This preserves your asset allocation and can be particularly advantageous when assets have temporarily declined in value.
With in-kind distributions, the asset’s value on the distribution date becomes your new tax basis. If you believe a depressed asset will recover, distributing it allows the ordinary income tax on the current low value while future appreciation becomes tax-advantaged long-term capital gains. This strategy is also helpful for unconventional assets like real estate or small business interests that are difficult to sell in portions.
Distribution Timing and Amount
You can take RMDs anytime during the year. Some prefer monthly distributions for regular cash flow, others take distributions early to ensure compliance, and some wait until year-end to maximize tax deferral and delay estimated tax payments.
Remember that RMDs are minimums – you can always take more. Consider larger distributions in years when your tax rate is unusually low due to higher deductions or lower income. This reduces future RMDs when your tax rate might be higher.
Conclusion
Strategic RMD planning can significantly reduce their tax impact. By understanding timing options, leveraging aggregation rules, using charitable strategies, optimizing account structures, considering in-kind distributions and timing distributions strategically, you can turn required distributions into opportunities for smart tax and retirement planning.
How to Reduce the Burden of IRA Required Minimum Distributions
September 1, 2025 · Blog, Tax and Financial News, Uncategorized
⏱ 4 min read
Required minimum distributions (RMDs) from traditional IRAs and 401(k)s often become a significant tax burden during retirement. As the percentage of your IRA that must be distributed increases each year, many retirees face higher adjusted gross income and increased exposure to stealth taxes. However, with strategic planning, you can transform RMDs from burdens into opportunities.
Timing Your First RMD
The RMD starting age has changed recently: age 72 for those born before 1951, age 73 for those born 1951-1959, and age 75 for those born in 1960 or later. Your first RMD must be taken by April 1 of the year following when you reach the required age.
While you can delay your first RMD until early the following year, most taxpayers should take it in the year they reach the required age. Delaying means you’ll take two RMDs in one calendar year – your delayed first RMD plus that year’s current RMD – potentially pushing you into higher tax brackets and increasing stealth taxes.
Managing Multiple IRAs
If you own several traditional IRAs, you have valuable flexibility under the aggregation rules. First, calculate the RMD for each IRA separately. Then, you can either take distributions from each IRA individually or combine all RMDs and withdraw the total amount from your IRAs in any ratio you choose, even taking the entire amount from just one account.
This flexibility allows you to rebalance your portfolio, draw down smaller accounts, or meet other financial goals. Just ensure that by December 31, your total distributions equal or exceed the aggregate RMD. Note that inherited IRAs and employer plans like 401(k)s cannot be aggregated and must have their RMDs calculated and taken separately.
Charitable Giving Strategy
One of the most tax-efficient strategies is using qualified charitable distributions (QCDs). If you’re over 70½ and make charitable gifts, taking your RMD as a QCD can reduce your taxable income while satisfying the distribution requirement. This strategy often provides better tax benefits than taking a distribution and then making a separate charitable deduction.
Account Structure Optimization
The tax law allows you to consolidate or split IRAs without tax consequences using direct trustee-to-trustee transfers. Some people prefer multiple IRAs for beneficiary planning, different investment strategies or to keep 401(k) rollover money separate. Others find multiple accounts harder to manage and worry about unequal performance affecting beneficiaries differently.
Consider your specific situation: if you have a qualified longevity annuity contract (QLAC) that delays RMDs until age 85, managing it in a separate IRA might be easier.
In-Kind Distributions
You don’t need to sell assets to generate cash for RMDs. Instead, you can make in-kind distributions by transferring securities directly from your IRA to a taxable account. This preserves your asset allocation and can be particularly advantageous when assets have temporarily declined in value.
With in-kind distributions, the asset’s value on the distribution date becomes your new tax basis. If you believe a depressed asset will recover, distributing it allows the ordinary income tax on the current low value while future appreciation becomes tax-advantaged long-term capital gains. This strategy is also helpful for unconventional assets like real estate or small business interests that are difficult to sell in portions.
Distribution Timing and Amount
You can take RMDs anytime during the year. Some prefer monthly distributions for regular cash flow, others take distributions early to ensure compliance, and some wait until year-end to maximize tax deferral and delay estimated tax payments.
Remember that RMDs are minimums – you can always take more. Consider larger distributions in years when your tax rate is unusually low due to higher deductions or lower income. This reduces future RMDs when your tax rate might be higher.
Conclusion
Strategic RMD planning can significantly reduce their tax impact. By understanding timing options, leveraging aggregation rules, using charitable strategies, optimizing account structures, considering in-kind distributions and timing distributions strategically, you can turn required distributions into opportunities for smart tax and retirement planning.
Disclaimer
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.
Life insurance is something most of us don’t want to talk about. But the truth is, no one gets out of life alive. So, it might make sense to face it now so that when you really need it, it’s there. Before you start looking for a life insurance policy, let’s dispel some of the untruths you might have heard.
Myth #1: It’s too expensive. According to a recent survey by Life Insurance Marketing and Research Association (LIMRA), 52 percent of people thought it was too expensive to have or get more of. And how did they come to this conclusion? They based this on their “gut instinct,” or a “wild guess.” Truth is, it’s more affordable than you think and varies from person to person. In fact, the estimated yearly cost of a $500,000, 30-year term insurance policy for a healthy 30-year-old, non-smoking female is $316.
Myth #2: It’s a pain to apply. Not true. Thanks to the pandemic, which caused us to eliminate or reduce human interactions (like getting a doctor’s exam for term policies), you can apply online. These days, all you have to do is answer a few questions on your phone. Easy peasy.
Myth #3: My company’s policy is enough. Maybe. The coverage you have might not be enough for your family. Here are some facts. The median workplace life insurance coverage is either just a flat sum of $20,000 or one year’s salary.Of U.S. households that rely on workplace life insurance coverage, 44 percent say their families would struggle financially in less than six months should a wage earner die unexpectedly. So, what to do? A simple guideline is this: Aim for 10 to 12 times your annual salary and bonus, but people who are younger (farther away from retirement) might need more. Folks closer to retirement might need less.
Myth #4: I only need coverage if I’m working. If you’re not employed outside the home – like if you’re a stay-at-home mom – it’s still important to consider life insurance. Typically, life insurance is considered a replacement for lost income. If something happens to the non-breadwinner, it could also be necessary to pay for childcare and household work in your absence. The most important thing is to plan your coverage together with your family in mind so that you’re both in the best position possible should one of you pass away.
Myth #5: I don’t need life insurance until I’m older or become a parent. Nope. In fact, not only do you not have to be a parent, but your beneficiary could also be your partner or anyone else who relies on you. And you can change your beneficiaries (you can have more than one), should things change. Plus, if you apply for life insurance earlier in life, you’ll save money on premiums. Why? Because one thing that factors into how much you pay – or qualify for coverage at all – is your health. As you get older, your risk for developing health issues increases. According to LIMRA, 40 percent of those who have policies wish they’d bought them when they were younger.
In the end, you’ll want to take care of those who depend on you – and those you love. That’s why knowing the truth about life insurance matters.
September 1, 2025 · Blog, Tip of the Month, Uncategorized
⏱ 3 min read
Life insurance is something most of us don’t want to talk about. But the truth is, no one gets out of life alive. So, it might make sense to face it now so that when you really need it, it’s there. Before you start looking for a life insurance policy, let’s dispel some of the untruths you might have heard.
Myth #1: It’s too expensive. According to a recent survey by Life Insurance Marketing and Research Association (LIMRA), 52 percent of people thought it was too expensive to have or get more of. And how did they come to this conclusion? They based this on their “gut instinct,” or a “wild guess.” Truth is, it’s more affordable than you think and varies from person to person. In fact, the estimated yearly cost of a $500,000, 30-year term insurance policy for a healthy 30-year-old, non-smoking female is $316.
Myth #2: It’s a pain to apply. Not true. Thanks to the pandemic, which caused us to eliminate or reduce human interactions (like getting a doctor’s exam for term policies), you can apply online. These days, all you have to do is answer a few questions on your phone. Easy peasy.
Myth #3: My company’s policy is enough. Maybe. The coverage you have might not be enough for your family. Here are some facts. The median workplace life insurance coverage is either just a flat sum of $20,000 or one year’s salary.Of U.S. households that rely on workplace life insurance coverage, 44 percent say their families would struggle financially in less than six months should a wage earner die unexpectedly. So, what to do? A simple guideline is this: Aim for 10 to 12 times your annual salary and bonus, but people who are younger (farther away from retirement) might need more. Folks closer to retirement might need less.
Myth #4: I only need coverage if I’m working. If you’re not employed outside the home – like if you’re a stay-at-home mom – it’s still important to consider life insurance. Typically, life insurance is considered a replacement for lost income. If something happens to the non-breadwinner, it could also be necessary to pay for childcare and household work in your absence. The most important thing is to plan your coverage together with your family in mind so that you’re both in the best position possible should one of you pass away.
Myth #5: I don’t need life insurance until I’m older or become a parent. Nope. In fact, not only do you not have to be a parent, but your beneficiary could also be your partner or anyone else who relies on you. And you can change your beneficiaries (you can have more than one), should things change. Plus, if you apply for life insurance earlier in life, you’ll save money on premiums. Why? Because one thing that factors into how much you pay – or qualify for coverage at all – is your health. As you get older, your risk for developing health issues increases. According to LIMRA, 40 percent of those who have policies wish they’d bought them when they were younger.
In the end, you’ll want to take care of those who depend on you – and those you love. That’s why knowing the truth about life insurance matters.
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Life insurance is something most of us don’t want to talk about. But the truth is, no one gets out of life alive. So, it might make sense to face it now so that when you really need it, it’s there. Before you start looking for a life insurance policy, let’s dispel some of the untruths you might have heard.