Gift Tax and Gift to Children

[SocMO]

Here's the simple question:

I am fully retired, I wish to gift some funds from my traditional IRA to children. 

Scenario: withdrawn $10K from IRA, give to child. Do I pay tax on that W/D?

What if I wish to give each child $10K, total $30K WD, do I pay taxes on the full WD, or would I do separate WD? 

Normally, if you W/D from your retirement account, you would get a 1099 or 95 showing the distribution, thus having to report on tax returns.

Would I have to show then the W/D as it's a gift on return?

Do I have to report the 1099 or 95 reporting?

I've looked at various bits of information, but some of the explanations are not real clear. So looking for simple answer to this particular scenario.

Thanks.

[DoninGA · Accepted solution]

The funds withdrawn from an IRA will be taxable.  Beyond rolling over the funds to another tax deferred account or making an Qualified Charitable Distribution, how you use the funds is not relevant.  There is no tax exclusion for using the funds withdrawn as a gift.

If you make the withdrawal you will receive a Form 1099-R showing the amount withdrawn and the taxable amount withdrawn.

You do not report the gifts given on a tax return.  Nor are the gifts received reported on a tax return.

If the gift given to an individual is greater than $18,000 then you would have to file a Form 709 with the IRS.

There would not be any gift taxes owed if the total of all gifts ever given is less than $13.61 million

TurboTax does not support IRS Form 709

[Opus 17]

Any money you withdraw from an IRA, for any reason, is taxable to you.  What you do with the money after you pay the tax has no effect on the tax you will owe.

**By withdraw, I mean you get the money in your bank account to spend.  There are some different rules if you send money directly to a charity, or if you rollover money from one IRA into another IRA.  But if you withdraw the money to spend, give away, or invest elsewhere, you pay the tax first.