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Don’t miss this: Wonderful opportunity for your older (70+) friends and family.

March 6, 2016   |   News

We have some exciting news.   Congress has permanently renewed the Qualified Charitable Distribution (QCD) provision.  This allows people over the age of 70-1/2 to donate traditional IRA withdrawals (including required minimum distributions [RMDs]) directly to a qualified charitable organization.

This is a very powerful tax saving and gift magnifying tool.  Taking an RMD as a QCD allows it to completely bypass the tax return! This reduces an individual’s adjusted gross income (AGI) which may decrease the amount of tax required on social security income.  It also may increase the deductibility of some expenses, like medical deductibles and prescription co-pays. 

Using a QCD can be especially powerful for people that use the standard tax deduction.  Often this will allow someone to have their cake and eat it too!  Here’s how.  They may continue to take the standard deduction and effectively deduct their charitable giving through a QCD.  This could not be done before.  If someone currently itemizes their deductions, it might now be more advantageous for them to take the standard deduction, since they are now permitted to deduct giving on top of it.   

Here is an example of the tax savings that may be available.

We encourage you to let your 70 and older friends know that they should consider doing all their charitable giving through a QCD, even regular giving to their local church.  This is great legislation! Congress understands that it is helpful for our society to support charitable organizations.  They have put this in place to encourage it – so let’s use it.  Utilizing the QCD is an excellent application of LifeGuide’s seventh principle of investing: “Don’t pay more tax than required.” 

Please know that there are strict rules that need to be followed in order to correctly use the QCD.  For example, withdraws must be made in the name of a qualified charity and only those who are required to take RMDs are eligible.   There are other rules to be aware of, and we have researched this thoroughly and can help provide guidance. 

Please encourage your friends and family to give us a call to discuss their specific situation.  We are excited to help them increase the impact that they are having on the charities they support.  Please remember, we offer an initial consultation at absolutely no cost or obligation.       

 

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