Unlocking the Power of Giving: Qualified Charitable Distributions (QCDs) and Required Minimum Distributions (RMDs)

Ann Miller |

As we approach the end of the year, we wanted to share an exciting opportunity that not only aligns with your philanthropic values but also provides a tax-efficient way to meet your Required Minimum Distributions (RMDs)—Qualified Charitable Distributions (QCDs).

Understanding QCDs:

A Qualified Charitable Distribution allows you to directly transfer funds from your Individual Retirement Account (IRA) to a qualified charity of your choice. The amount donated through a QCD can be used to satisfy part or all of your RMD for the year.

Key Advantages:

Tax Efficiency: The amount donated through a QCD is excluded from your taxable income. This can be particularly advantageous if you no longer itemize deductions, as it provides a tax benefit without the need to itemize.

Philanthropic Impact: QCDs offer a meaningful way to support the charitable causes that matter most to you. By directing your RMD to a qualified charity, you contribute to positive change while meeting your financial obligations.

Important Considerations:

Eligibility: To make a QCD, you must be at least 70½ years old. The distribution must go directly from the IRA to the charity to qualify.

Annual Limit: The maximum annual amount that can be distributed through QCDs is $100,000 per individual. For couples filing jointly, each spouse can contribute up to this limit.

How to Proceed:

Identify Charitable Recipient: Choose the charitable organization(s) you wish to support.

Distribute Directly to Charity: Ensure that the distribution is made directly to the charitable organization(s) to qualify for the tax benefits.

We encourage you to explore this impactful strategy with your tax advisor to determine how QCDs can complement your financial plan. If you have any questions or need assistance navigating the process, please don't hesitate to reach out.