Season Of Giving

As we enter the last month of a turbulent year, we also begin the season of giving. There are so many opportunities to do good with there so many in need. A lot of us are truly fortunate to be able to do things to help those in need. With that in mind, there are many causes out there that need help. If you are able and inclined, a Qualified Charitable Distribution could be a powerful way to support those in need while lowering your own taxes.

How a QCD Works

  • QCDs allow IRA owners who are age 70 ½ or older to directly transfer up to $100,000 annually from an IRA to charity, tax-free.
  • QCDs are also available to IRA beneficiaries over age 70 ½. You don't have to wait to the mandatory distribution age of 72.
  • They are not available from company plans or active SEP or SIMPLE IRAs.
  • The important component of a QCD is that the funds must be paid directly from the IRA to the charity. You may not take a distribution from your IRA and then contribute it to a charity and consider that transaction a QCD.
  • You may not receive anything of value from the charity in exchange for making the QCD

QCD Tax Benefits

  • The tax reform that went into effect in 2018 raised the standard deduction and with many taxpayers now taking that it eliminated their normal tax deduction for charitable gifts. QCDs allow the donations made from the IRA to be excluded from income. With a QCD, you get a tax break for your charitable contribution even if you are using the standard deduction.
  • Another benefit of a QCD is that the amount transferred from the IRA to the charity is not included in your adjusted gross income (AGI) for the year. By not including the distribution in AGI you can potentially avoid:
    • the loss of exemptions or deductions
    • the loss of credits
    • hitting phase outs
    • AMT (alternative minimum tax), the 3.8% surtax on net investment income
    • The increase in Social Security premiums for Medicare Part B and Part D

We would love to coordinate with your tax professional to determine whether a Qualified Charitable Distribution or any other tax strategy could benefit you this year, but time is running out. Please reach out to us as soon as possible.

Dawna DuClau, FPQP®

Associate, Acadium Financial Partners
Paraplanner, RJFS

3601 PGA Blvd., Suite 301
Palm Beach Gardens FL 33410
C 772.370.1143

Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Acadium Financial Partners is not a registered broker/dealer and is independent of Raymond James Financial Services.