Rules to keep in mind when considering a QCD TO SATISFY YOUR RMD:
- You must be age 70 ½ or older, although you do not have to take an RMD until age 72. Even prior to RMDs, QCDs are still a tax-efficient way to make gifts to charity.
- The limit is $100,000 per taxpayer. Although, both you and your spouse can make QCDs up to $100,000 each to qualified charities within a single tax year.
- QCDs must be made directly to charity. A common mistake is people distributing the money to themselves and then using it to make a charitable donation. You can avoid this mistake by requesting an “IRA checkbook” to be used specifically for gifting.
Reducing or satisfying your RMD through QCDs lowers your taxable income. Using various tax strategies to lower your taxable income can lead to other potential benefits such as reducing your Social Security tax, avoiding the 3.8% Net Investment Income Tax, and reducing your Medicare premiums.
If you have additional questions regarding QCDs and how they may benefit your unique situation, please reach out to your Wealth Management Advisor or Marc Verdi.
Author: Kyle Fischer, CPA, CFP® | Wealth Management Advisor
Written: November 15, 2021