As a part of our ongoing commitment to help our clients implement their financial plans in the most tax sensitive way, we have written a message to our congressmen to address the Qualified Charitable Distribution (QCD) provision that has not yet been renewed for 2014. In previous years, this QCD provision has saved our clients significant tax dollars on monies gifted to their favorite charities. We consider it a noble priority for our government representation to renew this allowance to remove a perceived tax on giving, and thus make giving as tax efficient as possible.
A copy of the following message was sent to our Pennsylvania Senator Robert Casey, Senator Pat Toomey and Rep Lou Barletta. We encourage you to sign a client version of this letter and mail it to your own Senators and Representatives; please see below for further information.
Thank you for your ongoing dedication and service to
us as your constituents.
We represent LifeGuide Financial Advisors, a faith-based
financial planning practice located in Central Pennsylvania, managing about
$100 million in assets.
It is our mission to help our clients discover and fully
live out the unique plan God has for their lives; namely, to maximize Kingdom
resources. In keeping with this mission, the reason we are writing to you today
is to urge you to bring the allowance for Qualified Charitable Distributions to
the floor for discussion, and ultimately, permanent renewal.
We are writing to you today to address what we perceive to
be a tax on charitable giving. We have
many clients who have been blessed with more than they need, and who actively
strive to steward the resources that God has entrusted to them. Often, this takes on the form of them setting
a goal to give all or a portion of their assets to charity or other noble
causes while they are still living. In
planning for these clients in the past, we have utilized the Qualified
Charitable Distribution allowance, which previously allowed clients over 70-½
years old to direct up to $100,000 of distributions per year from their
Traditional Individual Retirement Arrangements (IRAs) directly to charity. This arrangement allows for a given client to
be generous without having to consider the negative ramifications of the
additional income increasing their tax burden.
Some might argue that this topic is irrelevant due to the
charitable deduction that is available to clients who take an IRA distribution
themselves, and then write a check to their charities for the amount of the
distribution. While this may be the case
in some instances, we rarely see this play out.
This is because any non-QCD IRA distribution increases a client’s Adjusted
Gross Income (AGI), and the deductibility of several items hinges on this AGI
number, including medical expenses, tax preparation fees, and investment fees.
Another big source of expensive tax delta for our retired
clients who give charitably queues off of a modified version of AGI
(MAGI). This source is the taxable
portion of a client’s social security benefits.
Finally, in the absence of the QCD provision, another limitation that
we’ve seen affect our client’s giving situations is the deductibility limit of
cash gifts – currently set to 50% of AGI.
An example of these factors working against an everyday
charitably minded client (who would have otherwise used the QCD provision), can
be represented by the attached tax statements and summary.
We urge you to work together with your colleagues in
Congress to permanently reinstate the
Qualified Charitable Distribution provision to remove the effective tax on
Thank you for your time and consideration.
To copy your Senators and Representatives on this message, please follow these instructions:
- Print off 3 copies of this letter (click hyperlink for client version).
- Visit this webpage to see who represents you (enter your zip code) in the U.S. Senate and the House of Representatives.
- Address each letter according to your representation (“The Honorable Pat Toomey”, etc.), sign, date, and mail the letter accordingly.
Thank you for helping us maximize our clients’ giving!