Talking QCDs in the Giving Season


Many Americans choose to make charitable donations with their retirement funds. For some it’s a way to give back to the community, while others use it as a way to support causes that are important to them. Whatever the reason for donating–if you choose to do so–you should understand the ramifications of that decision as well as the most efficient way to make a donation. It’s been a while since I’ve written about it, but qualified charitable distributions (QCDs) are probably the most efficient and effective way to make a charitable donation from your retirement funds. In case you forgot what a QCD is, it’s a charitable donation of up to $100,000 to a qualified 501(c)(3) charity made from an IRA. A QCD can offset any RMDs that need to be made for that year, but can only be made if you are 70 1/2 years old. QCDs offer a similar tax outcome to itemizing your charitable giving, if that matters to you. And yes, QCDs are allowed this year even though RMDs are suspended. Which leads me to my next part of charitable giving–the tax implications. While I cannot offer tax advice, I can advise you to speak with a tax professional if you are making substantial charitable donations in the hopes of taking advantage of tax incentives for doing so. That goes for whether you are over 70 1/2 and are making a QCD or are not yet retired, but want to make a substantial donation to your favorite charity. A tax professional should be able to give you a good idea as to how a donation may impact your taxes and whether it’s overall a good idea. However, if you want to know how a QCD or other charitable giving might affect your nest egg or financial plans, you will want to also speak with a certified financial planner or wealth manager.

Feeling Charitable? Make Your Gift Soon!

If you are considering making charitable contributions with some of your retirement money in the near future, you may want to make those contributions before the end of 2017. With the Republican tax reform bill set to become reality, the tax benefits of making such charitable contributions will see a major change in 2018. The bill nearly doubles the standard deduction for both single and married couples, thus limiting the number of people who can itemize starting next year as only people whose total itemized deductions exceed the standard deduction can itemize. The ability to itemize is important because you must do so in order to deduct a charitable gift. If you are unable to exceed the standard deduction, you will lose the ability to deduct charitable gifts when it comes to your taxes. This change could have a huge impact on people who may have been planning to make charitable gifts during retirement and have plans to deduct those gifts from their taxes. If you have questions regarding your charitable gifts and any corresponding tax questions, you will want to speak with a tax professional who will help you understand what the changes mean and how you can best move forward with your plans.

The Giving Season

The holiday season is often a generous time of year with people donating time and money to various causes and interests. If you are one of those people who are interested in giving back during the holidays, there are numerous ways you can do so. One way to give back is monetarily with a qualified charitable distribution (QCD). There are certain parameters which must be met to make a QCD and they can be a bit confusing, but there are tax benefits to making a QCD. If you have enough saved for retirement and are considering a QCD, you will want to talk with a certified financial planner to make sure you do so correctly. Another way to give back is with your time. Volunteering is a great way to help out in the community. Furthermore, if you are retired, volunteering can be a great way to stay active and share your professional knowledge in a way that helps others.