What’s a QCD and how might it benefit you? David talks through the ins and outs of qualified charitable distributions on today’s show.
If you’ve got a sizeable IRA, you may want to know about these opportunities to benefit from QCDs or qualified charitable distributions. Is a QCD something you should do as a part of your financial plan?
A few years ago, Congress significantly increased the amount of your standard deduction on your tax return, which meant most people no longer have to do itemized returns. Once you are over 70 and a half years old, you can gift money directly from the custodian to your church, university, or 501(c)(3). This allows you to give the money and still get the tax benefit, even without itemizing.
How much can you give through a QCD? The most a person can give is $100,000 per person in any given year. If you’re married filing jointly, this means $200,000 total between the two of you. This could be to one entity or separated out to a handful of nonprofits.
The money has to go from the custodian to the charity directly. It cannot go to a donor advised fund you may have set up previously or a private grantmaking foundation. Instead, it has to go directly to the institution you are benefitting.
When you’re preparing your taxes, you do not include a QCD when itemizing. You’ll want to assess whether you should do a QCD if you’re already itemizing. This is treated separately. Don’t wait until mid-December to do this. You may be tempted to do it through a check, but if you are too close to the end of the year, it can be recorded in the next year depending on when the check gets cashed.
Is this only for people who are facing RMDs and need a creative solution? David says it’s a good way to be charitable with your money in retirement, whether you are trying to use your RMD or not. Reach out to David and the team to see if it’s the right choice for you.
What’s the most important age of all? David shares how you can feel most confident in retirement, regardless of how old you are.
If you ever want your question spotlighted on the show or to ask David something about your retirement, email him at [email protected]
Listen to the entire episode or skip ahead using the timestamps below to skip to a particular question.
1:18 - What is a QCD?
4:54 - How much can you give with a QCD?
5:34 - Can it be done from a 401(k)?
6:24 - Where can it go?
8:38 - How does it work at tax time?
10:05 - When should you do it?
11:32 - Is it only for people who have RMDs?
“QCDs: It’s a really good way for people to gift this type of money, while they’re living, to charities they care about and not let the IRS get to take a bite out of it."
– David Dickens
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