A couple totally unrelated items

A few years ago I put a few garlic cloves in my garden. I did not harvest them properly, so the next year I had more garlic. Plus the type of garlic I planted sent up a flower stalk (called a garlic scape) that had little bulbils on them and they fell to the ground and sent up more garlic plants. As the garlic infestation grew, I learned that it was standard practice to clip off the scapes because they drew nutrition from the cloves and resulted in smaller cloves. I also learned that the scapes were edible and that there are a variety of recipes on the Internet for them. They have a very mild taste and they arrive early in the season when the garden is still not producing much.

As you get older the tax world changes if you have saved money in tax-deferred instruments such as IRAs and 401k plans. When you turn 70½ (with some exceptions) the government requires you to start taking money out of your tax deferred accounts so that you will pay the taxes you avoided when you were young. These withdrawals are called mandatory distributions.

Several months ago the Jasper Newton Foundation had a page in the annual report about how to avoid the taxes on the mandatory distribution by making charitable contributions from an IRA. This way of making your charitable donations can save significant money. Suppose that you annually give $1000 to your church or another non-profit organization. If you take the money in a mandatory distribution and then send it to the charity, you will pay taxes on the distribution. If you are in the 15% tax bracket, you will pay about $200 in taxes with the state and local income taxes added. However, if you have your financial organization write the check to the organization as a qualified charitable distribution, the check counts as part of your mandatory distribution but is not counted as income so you pay no taxes on it.

This way of making charitable contribution is quite new so many people are not aware of it. I asked the Jasper Foundation if they were getting donations using this method and was told that with one big exception, the answer was "No". I have found that some financial organizations make it much easier to make contributions in this way than others and I suspect that this is because some of the financial institutions have not yet updated their procedures.

If you are retired and approaching or taking mandatory distributions from tax-deferred savings, this way of supporting your charities is something to consider. You will need to talk to your financial advisor or financial institution to find out exactly how to make the gift.