Qualified Charitable Distributions

Qualified Charitable Distributions- Under the new tax law, those taking Required Minimum Distributions (RMD) can get a tax break even without itemizing by giving to charity. Using a Qualified Charitable Distribution (QCD) is a tax-savvy strategy that allows you to transfer up to $100,000 per year from your IRA directly to a qualified charity. It is only available to IRAs and individuals who have reached RMD age (70.5). Any amount processed as a QCD counts toward your RMD requirement and reduces the taxable amount of your IRA distribution. This lowers both your adjusted gross income and taxable income, resulting in a lower overall tax liability.

Even though the new law makes it more difficult to obtain a financial benefit for your charitable donations, all is not lost. If you are over age 70.5, consider taking advantage of the QCD. If you aren’t at that age yet, consider how you can intentionally position yourself to take advantage of these rules once you do turn 70.5. Start by evaluating how much you save in tax-advantaged accounts and how you spend your savings to support your retirement lifestyle. By using, or preparing to use, a QCD, you can meet your RMD requirement, satisfy your charitable intents, all while saving money on taxes both today and into the future.

If you would like more information about Qualified Charitable Distributions, please discuss with a qualified tax advisor.