Qualified Charitable Distributions (QCDs) provide individuals aged 70½ or older with a tax-efficient way to support charitable organizations while potentially fulfilling Required Minimum Distribution (RMD) obligations. Here is an overview of how QCDs work, their benefits, and key considerations for integrating them into your financial plan.
What is a Qualified Charitable Distribution?
A QCD allows individuals to transfer funds directly from their Individual Retirement Account (IRA) to a qualified charitable organization. This transfer can count toward the individual’s annual RMD without being included in their taxable income.
- Fact: The annual QCD limit is $100,000 per individual. Amounts transferred as QCDs are excluded from taxable income, which may help individuals who do not itemize deductions.
To qualify, the distribution must go directly from the IRA custodian to the charity, and the organization must meet IRS requirements as a 501(c)(3) entity.
Eligibility and Rules
Several requirements govern QCDs:
- Age: You must be at least 70½ years old at the time of the distribution.
- Account Type: QCDs can only be made from traditional IRAs or inherited IRAs. Employer-sponsored plans like 401(k)s or 403(b)s are not eligible.
- Charities: Only organizations that qualify as 501(c)(3) charities can receive QCDs. Private foundations, donor-advised funds, and certain other entities are excluded.
- Tip: Before initiating a QCD, confirm that the charity meets IRS qualifications.
Tax Advantages of QCDs
One primary benefit of QCDs is that the distributed amount is excluded from taxable income. This may reduce the likelihood of crossing income thresholds that could increase Medicare premiums or taxes on Social Security benefits. For those who take the standard deduction, QCDs provide a tax-efficient way to achieve charitable goals without requiring itemized deductions.
- Fact: The 2024 standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly, making it challenging for many taxpayers to itemize. QCDs offer an alternative approach to tax-efficient giving.
QCDs and Required Minimum Distributions (RMDs)
If you are required to take RMDs, a QCD may count toward fulfilling that obligation. This can benefit individuals looking to reduce their taxable income while supporting charitable causes.
- Example: If your RMD for the year is $20,000 and you make a $15,000 QCD, only $5,000 of your RMD would be included in taxable income.
It’s important to note that QCDs exceeding the annual RMD cannot be carried over to the following year, and amounts excluded from taxable income cannot also be claimed as a charitable deduction.
Executing a QCD
Follow these steps to make a QCD:
- Verify Eligibility: Ensure you meet the age requirement and that the charity qualifies under IRS rules.
- Work with Your IRA Custodian: Contact your custodian to initiate the transfer. The funds must go directly from the IRA to the charity.
- Keep Records: Obtain documentation from the charity for tax reporting purposes.
- Tip: Start the process early to avoid delays, especially if you intend to meet RMD deadlines.
Additional Considerations
- Annual Limit: The $100,000 QCD limit applies per individual. Married couples can each make QCDs up to this amount.
For those incorporating QCDs into their charitable giving strategy, evaluating cash flow needs and long-term financial goals is essential.
Conclusion
Qualified Charitable Distributions provide a flexible and tax-efficient way to achieve philanthropic goals while addressing RMD requirements. By planning carefully and understanding the rules, you may integrate QCDs into your overall financial strategy effectively.
If you’d like to explore QCDs further or determine if they align with your financial goals, feel free to contact us. We’re here to assist with your planning needs.
For additional insight read Chapter 6 of Wealth on Purpose by Bryan Ballentine.
Sources: Located at the bottom of article
Golf Tip of the Week:
Want another 20 yards? Then copy this move in Viktor Hovland’s swing
Imagine that you have a wedge parked under the target side of your lead foot as you take your stance. Not a golf club, rather the kind of wedge you use for a doorstop or to split firewood. As you swing your driver into the ball, use that wedge to push down and away from the target with your lead leg. That move is something Viktor Hovland does, and it’s one reason he’s among the best drivers on the PGA Tour, says Golf Digest Teaching Professional Josh Zander. Hovland, second in total driving, the tour’s stat that combines distance and accuracy, uses that push to “throw on the brakes” with his lower body, which allows his driver to zip past him and rocket the ball into orbit.
“That move will put the mass of your body behind the ball, allowing you to launch it higher with less spin,” Zander says. “If you usually hit down on the ball and/or slide toward the target, which are common faults I see in many downswings, this move is a game-changer in terms of picking up distance. You can even practice this push off with an actual wedge. You’ll start sweeping it off the tee.”
Ironically, Hovland says he’s trying to curtail the move, preferring to sacrifice a little power for accuracy.
“I need to get my shaft a little forward at impact, so I’m not leaning back quite as much,” he says. “I try to flight it down . . . almost always trying to hit a cut.”
To produce that lower, more controllable fade, Hovland sets up with a flared left foot, which helps delay the clubface from closing, Zander says. He also does a couple of other things to help keep it in the fairway: “At the top of his swing, the face is shut as a result of bowing his left wrist. If he fully released from there, he would hook it,” Zander says. “But his left arm stays a little bent coming down, like Jordan Spieth in his heyday. It’s a clubface-opening move, and that keeps it more stable through impact. Granted, it’s a power leak, not letting that arm extend, but he’s got plenty to spare.”
Hovland, 24, a three-time winner on the PGA Tour and seventh on the World Golf Ranking at the end of May, averages 307 yards off the tee with a driving accuracy of 65 percent. Both are among the top 50 on tour.
“It’s still a very powerful swing,” Zander says. “Look at his torso rotation; it’s incredible. And he starts loading into that lead leg as he’s still going back. That gives him time to set up that push-off move through impact.
“Also, look at his head position. It’s well behind the ball and marks the low point of the swing. If you’re trying to hit up on the ball and launch it high with less spin, copy that.”
Golf Tip adapted from golfdigest.com i
Recipe Tip of the Week:
Turkey Pot Pie
Ingredients
2 tablespoons butter
1 onion, chopped
2 stalks celery, chopped
3 carrots, chopped
4 tablespoons flour
4 cups chicken or turkey stock
2 potatoes, peeled and diced
2 cups shredded turkey
2 tablespoons chopped parsley
1/2 cup frozen peas, thawed
1 prepared pie crust
1 egg, lightly beaten
Directions:
- Preheat oven to 350 degrees F.
- Melt butter in saucepan and cook chopped onion until tender. Stir in celery and carrots and cook for 2 minutes. Stir in flour and cook for 2 minutes. Add chicken stock and bring to a simmer. Add potatoes and simmer until tender. Stir in turkey, parsley and peas. Pour mixture into casserole. Top with pie crust and brush with egg. Bake for 30 minutes until crust is golden.
Recipe Tip adapted from foodnetwork.com ii
Travel Tip of the Week:
A Historic Southern California Hotel Is Back — and It Has a Luxury Spa, a Chic Pool Deck, and Panoramic Ocean Views
When The Breakers Hotel debuted along Ocean Boulevard in Long Beach, California, it immediately drew the attention of high-flying urbanites. In the years to come, the hotel became a hot spot for celebrities like Elizabeth Taylor and John Wayne, who enjoyed its opulent exteriors and culinary offerings.
Now, after a multimillion-dollar renovation and under the management of Fairmont Hotels & Resorts, guests returned on Nov. 19.
“As we proudly open the doors to Fairmont Breakers Long Beach, we celebrate not only the revitalization of a historic landmark but a new era for this iconic property that will redefine the standard for luxury hospitality in Long Beach,” Mark Steenge, the hotel’s general manager told Travel + Leisure, calling the hotel “a cornerstone of the city’s history.”
While the hotel has been reimagined for the modern traveler, guests will also find many original features — the towering Mediterranean-inspired facade with its signature cupola has been brought back to life. In the lobby, new marble flooring and grand chandeliers complement stunning plaster moldings dating back to the hotel’s early years.
In the 185 guest rooms and suites, the design teams at Hirsch Bedner Associates (HBA) and RVD Associates have created a timeless feel through a neutral palette of earthy and coastal tones with touches of sparkly golds inspired by the sun reflecting off the ocean’s surface.
The accommodations, ranging between 287 square feet to 790 square feet, feature oversized windows, marble bathrooms with Le Labo toiletries, and look out to Long Beach’s harbor and downtown.
The hotel also welcomes back its renowned Sky Room restaurant, a staple on the city’s dining scene since 1938. Helmed by chef Maxwell Pfeiffer, the contemporary menu is heavy on fresh seafood and premium cuts served in an elegant dining room with leather banquette seating and panoramic views of the Pacific coastline.
The property’s second restaurant, Nettuno, pays homage to Italian cuisine through a seasonal menu of homecooked dishes with a California twist, complemented by an extensive cocktail and wine list.
Inspired by the Gilded Age, the property’s ultra-chic jazz bar, Alter Ego, dons gold accents, custom wallpaper, and plush velvet seating paired with hand-crafted libations and live music.
Another highlight is the new 10,000-square-foot spa with eight treatment rooms and a relaxation lounge. Guests can choose from a long list of massages and face and body treatments, such as the Pacific Algae Body Wrap or the Reset & Correct CBD Massage. And for those who like to keep up with their workout routines on the road, there is a two-story gym with Technogym equipment.
In the mood for total relaxation? Head to the rooftop swimming pool surrounded by striped sun lounges and umbrellas.
Travel Tip adapted from travelandleisure.com iii
Copyright © 2024. Ballentine Capital Advisors. All rights reserved.
Our mailing address is:
Ballentine Capital Advisors
15 Halton Green Way
Greenville, SC 29607
Sources:
- IRS Publication 590-B: Distributions from IRAs
- Fidelity Charitable: QCD Guide
- Tax Policy Center: Charitable Giving
- National Association of Tax Professionals: QCD Guidelines
Disclosure:
Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.
Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Advisory services through Ballentine Capital Advisors, Inc.
ihttps://www.golfdigest.com/story/want-another-20-yards-copy-this-move-in-viktor-hovland-swing
iihttps://www.travelandleisure.com/fairmont-breakers-long-beach-california-hotel-reopening-8750153
iiihttps://www.foodnetwork.com/recipes/turkey-pot-pie-recipe-1962933
