Charitable Giving & Qualified Charitable Distributions | AP Wealth Management

CHARITABLE GIVING | Qualified Charitable Distributions

At AP Wealth, one of the conversations we love having with clients is charitable giving.  It is truly amazing listening to our clients discuss all the different ways they give back to the community.  In fact, those conversations inspired us to create the Walton Award which recognizes a couple each year that exemplifies a lifestyle of community service. Be sure to check out the award winners on the Walton Award section of our website.

If you are making gifts to your church or other charitable organizations and you are over age 70 ½, the IRS allows you to do something called a qualified charitable distribution (QCD).  A QCD lets you take money from an IRA or inherited IRA and give it directly to a charity.  If you follow the QCD rules, you will not have to pay taxes on that money.

Through our charitable conversations, the AP Wealth team helps people consider whether a QCD makes sense for their situation.  Below are a few items the team will help you consider and discuss before you make a QCD.

  1. Age – you must be over 70 ½ to make a QCD. In the year you turn 70.5, you must wait until you actually turn age 70.5 before doing the QCD.
  2. Taxes – QCDs are a great fit for those who DO NOT take itemized deductions anymore. With the recent tax law changes, we are seeing a lot more people in this situation. If you do use itemized deductions, a QCD may still be a good fit.  It will depend on what amount of your itemized deductions are from charitable contributions.
  3. Required Minimum Distributions (RMD)The SECURE act just changed the rules on RMDs. If you are required to take a “required minimum distribution” (RMD) from your IRA or inherited IRA, you can use a QCD to satisfy the RMD.  The key is you must take the QCD before the RMD.  This can trip a lot of people up, and we recommend you talk with the AP Wealth team to ensure you follow all the QCD and RMD rules.
  4. Account Type – You can only take QCDs from an individual IRA. This is one reason many people should consider consolidating old employer retirement plans into an individual IRA.  Consolidation simplifies things and helps you use the QCD option.
  5. Charities – most churches or charities are eligible to receive QCDs. There are a few limitations such as donor-advised funds and private foundations as they cannot receive a QCD.

We are already helping many of our clients do QCDs each year.  If you, a family member, or a friend would like to consider this strategy our team would be happy to talk with you. Feel free to call us at (706) 364-4281.

Clayton Quamme, CFP®

Clayton Quamme, CFP®
cquamme@apwealth.com
(706) 364-4281

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