The ABCs of QCDs

Ilse K. Saewert, J.D., CDFA®, WMS, CEP
Vice President, Investments
MKS Wealth Advisors of Raymond James

If you have an IRA and are 70 ½ or older, you may receive a tax benefit from making a Qualified Charitable Distribution (QCD) to a qualified charity.

Qualified Charitable Distributions (QCDs) are growing in popularity as a way to make a gift to an organization with 501(c)(3) status because they can benefit taxpayers (even those who take the standard deduction and do not itemize).

What exactly is a QCD? A QCD is a tax-free, direct transfer of funds from your IRA payable to a qualified charity such as Resilience: Advocates for Ending Violence.  QCDs count toward satisfying your required minimum distribution (RMD) that are required starting at age 72. You may also make a QCD as young as 70½.

In addition to the direct benefit to the charity, a QCD benefits the donor by reducing taxable income (normal distributions from an IRA are taxable events). Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.  Also, QCDs don’t require that you itemize, which means you may both benefit from a higher standard deduction, and still get the tax-free benefit of gifting to a charity through a QCD.

If you like the idea of a QCD, consider the following requirements to determine whether the QCD is a viable option:

(1) You are 70½ or older;
(2) You are owner of one of these types of IRAs: Traditional; Rollover; Inherited; SEP (inactive plans only); or SIMPLE (inactive plans only);
(3) The distribution must be payable directly to a 501(c)(3) charity; and
(4) The total dollar amount gifted through QCDs will not exceed $100,000 for 2022.

If you have questions, talk with your financial advisor or tax advisor to see how a QCD can help you benefit from making charitable gifts!

Happy Giving!

Ilse K. Saewert, J.D., CDFA®, WMS, CEP
Vice President, Investments
MKS Wealth Advisors of Raymond James
150 Central Avenue, Suite 200 | Holland, MI 49423 | 616.820.2280
Ilse.Saewert@RaymondJames.com | RaymondJames.com/mksb

 

This material was written by Ilse Saewert. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Information provided are those of the author and are not necessarily those of Raymond James. All information is as of this date and are subject to change without notice.

 Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Raymond James & Associates, Inc., member New York Stock Exchange/SIPC

 

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