Estate Planning • Tax Minimization

Reduce Tax Liability on RMDs

Consider Making Charitable Donations Using a Qualified Charitable Distribution

Qualified Charitable Distributions or QCDs are a direct transfer of monies from your IRA custodian as funds payable to a qualified charity. QCDs may be tallied toward meeting your annual required minimum distributions (“RMD”), provided certain stipulations are met.

This is a win-win for almost all charitably minded investors. First, by donating to a charity you do good with your money. Equally important if not as altruistic, a QCD excludes the amount donated from your taxable income. This is unlike almost every other traditional withdrawal from an IRA. Lower taxable income may help reduce the impact on certain other deductions and tax credits. This includes impacts on Medicare costs.

Making a QCD

Most IRAs are eligible.This includes Inherited, Rollover and Traditional IRA’s (as well as SEP’s and SIMPLE’s if rolled over). However, there are requirements.

  1. You need be 70 and one half years old or older.
  2. QCDs are limited to the amount, otherwise taxed as ordinary income, excluding any overages or non-deductible contributions.
  3. $100,000 is the Maximum annual amount that qualifies for a QCD. This is the total allowable to one or more charities annually.
  4. For spouses filing taxes jointly, a spouse can also make a QCD from his or her IRA within the same tax period for up to $100,000 (doubling it to $200k).
  5. For a QCD to count towards the current year’s RMD funds must leave the IRA by the RMD deadline, typically December 31.

Funds donated beyond the RMD do not count toward a future year’s RMD. There are nuanced rules that address  the types of charities that qualify for QCDs. The easiest defined benchmark is that all charities must be a 501(c)(3) organization, eligible to receive tax-deductible contributions.

Atlantic Wealth Partners offers professional counsel to help you understand and navigate the framework.

Steve Olson CFP ®, AEP ®

CEO | FAMILY WEALTH ADVISOR

Steve Olson’s experience spans over a decade of focused tax planning, legal strategy interpretation, investment management, and advisory services to wealthy individuals and families throughout the U.S.

Over the course of his still young career, Steve provides counsel and management on individual assets and portfolios—encompassing a combination of securities, real estate, privately held businesses and other alternative investments—ranging in value from $5 million to over $400 million in value.

Steve is currently the Founder and CEO of Atlantic Wealth Partners in Jupiter, FL.

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