Charities and Year-end Giving


I hope all of My City’s readers had a wonderful Thanksgiving, as we all have much to give thanks for. As we move into the Christmas season, we often feel an urge to give a little extra during this time of the year, as it is a season revolving around the giving and receiving of gifts. One other thing that a lot of older investors associate with the year end, is what is called the Required Minimum Distribution. The Required Minimum Distribution (RMD) is a required amount that people who have attained the age of 70.5 need to withdraw from their retirement accounts. For some investors, this RMD has become very substantial, to the tune of tens of thousands of dollars. Many investors don’t really even want to take these distributions, and the main reasons for that is that are: 1) they don’t need the money at that point in time, and 2) they have to pay taxes on these funds that they don’t want in the first place.

Being that it’s the season of giving, I would like to share what I believe to be a very valuable tool that older investors have when it comes to charitable giving and their RMD. It is the strategy of utilizing the Qualified Charitable Distribution (QCD). Many people who are over 70.5 years old will give to their favorite 501c3 organizations (charities) either on a weekly, monthly, or annual basis. For these people, the QCD could really help them to decrease their annual taxable income.

The IRS defines a QCD this way: “Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70.5 or over, that is paid directly from the IRA to a qualified Charity.” If you would like more information on this, you can see the website and search Pub, 590-B.

What is great about this QCD is that it meets the RMD and also makes it so that the distribution is not included in the individual’s income. Not only does it avoid the taxation at the individual level, but the charity receiving the funds also does not have to pay taxes on this distribution. Essentially, no one is required to pay taxes on this distribution, and the only entity not benefiting from this QCD is the government – which, at this point, I think most people involved in this type of transaction would be happy about.

In summary, if you are an investor over the age of 70.5, have retirement income, and are currently making charitable donations, you should really consider utilizing the QCD as the most tax-efficient way to get those assets to the charities that you want to support.

I wish you all a very Merry Christmas, Happy Holidays and a Happy New Year!

800.338.4586 The Durant 607 E. 2nd Ave., Suite 100 Flint, MI 48502 Securities offered through Sigma Financial Corporation, member FINRA/SIPC. Investment advisory services offered through SPC, a registered investment advisor. OLV Investment Group is independent of Sigma Financial Corporation and SPC.



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