Great Tax Planning Idea If You Are Taking Required Minimum Distributions

Gail Maidenbaum, MBA March 10th, 2021

Qualified Charitable Distributions (QCD) can reduce the taxable income from your Required Minimum Distribution (RMD). You can direct that a portion of your RMD from your IRA be sent directly to a qualified charity as a QCD. As a result, that amount is not considered taxable income to you.

For example, if your RMD is $10,000 and you have the custodian send $1,000 directly to a qualified charity, your taxable income would only increase by $9,000. This is worth more to the taxpayer than a deduction or a credit since it not only reduces your taxable income, but also reduces your adjusted gross income.

Beware that the 1099R you receive may not reflect the QCD so you must alert your tax preparer to the amount of the QCD’s you make in any year.

QCD’s must be made from IRAs and cannot be made from Inherited IRAs or any other type of retirement plan. The lRS limit on QCD’s is $100,000 per year per taxpayer. You must be over 70 ½ years old when you make the QCD.

Please call your wealth advisor if you have any questions on QCD’s for 2021.

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

Read More By Gail Maidenbaum, MBA

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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