What is a Qualified Charitable Distribution? Is it Right for me?

Now that we have filed our first tax return since the tax reform bill in 2017, many of you may be wondering if there are any strategies available to continue to make charitable contributions and enjoy some form of tax savings. If you are over 70 1/2 years old AND you have funds in an IRA, then there was one positive addition in the Tax Cuts and Jobs Act (TCJA).

Before 2018, Qualified Charitable Distributions (QCD) were considered on a year by year basis by Congress, and we never knew until the end of the year if this provision would be renewed, and therefore a permissible strategy. Now that QCDs are permanently extended, we believe they are a great strategy IF you qualify.

What is a QCD?

It is a direct gift transfer from your IRA to a public charity. The gifted amount sent to a charity does not count as income even while you satisfy your Required Minimum Distribution (RMD) for your IRA (Roth IRAs are exempt from RMDs).

Are There Rules to Make a QCD?

Like many charitable giving strategies, there are rules and restrictions for QCDs:

  • You must be at least 70 ½ or older on the date of distribution
  • The maximum amount is $100,000 per year, per person
  • Payment must go directly from the custodian to the charity (checks can be mailed to the IRA owner to forward to the charity)
  • There is no federal or state tax withholding(s) on the charitable amount
  • Distributions are only allowed from an individual or rollover IRA
  • Active SEP or SIMPLE IRAs are not eligible accounts
  • The donation must go to a public charity

How does it Work?

  • Notify your advisor or custodian of your IRA that you wish to use some or all of your RMD (up to $100,000 per person) as a gift to a charity. Give them the name of the charity, dollar amounts that you wish to gift, and address where you want the check mailed.
  • There is no limit on the number of charities that you can consider, as long as the total does not exceed your RMD or $100,000 per year.
  • A check will then be made out in the name of the charity and can be mailed directly or sent to you to submit to the charity.
  • Ask for a letter confirming your contribution. You need to keep track of any amounts you donate as a QCD.
  • Let your accountant know for the next tax year what amount you gave to charities using the QCD provision.

What Qualifies as a Public Charity?

The IRS defines a “public charity” as an organization that has an active program of fundraising and receives contributions from many sources, including the general public, governmental agencies, corporations, private foundations, or other public charities. Many churches, hospitals, medical research organizations affiliated with hospitals, schools, colleges, and universities meet the criteria of being a public charity.

As with any tax strategy, please consult with your tax advisor about eligibility requirements and to determine if making a QCD is appropriate for you.

This article contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Past performance is no guarantee of future results. Reading or utilizing this information does not create an advisory relationship. An advisory relationship can be established only after the following two events have been completed (1) our thorough review with you of all the relevant facts pertaining to a potential engagement; and (2) the execution of a Client Advisory Agreement. There is no guarantee that the views and opinions expressed in this article will come to pass.  Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (www.adviserinfo.sec.gov).

For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (http://www.stratwealth.com/legal).

Is It Still A Good Time For You To Invest?
People often ask me, “is now the right time to get into the market?” If I had a crystal ball that told me when to buy and when to sell, I probably would not be writing this piece! With the highest inflation numbers since the 1980s, concerns about an economy potentially in recession, and the most prolonged downturn in stocks since the Great Financial Crisis, there is no question that investors have been challenged this year. The good news is that there are always opportunities for long-term investors with the right plan. Whether you are an experienced investor, have recently come into cash, or are new to the financial markets, below I discuss some things to consider when asking if now is the right time to invest.
Read More
Retiring in a Volatile Market
This week has been another extremely turbulent one in the stock market. While it is never comforting to see large, red numbers, volatility can be even more uncomfortable for recent retirees or those considering retirement. A colleague of mine recently told me that he has seen more of his clients retire in the last two years than in his first ten years of working at SWP. This got me thinking a lot about the notion of retirement. Retirement is a huge life event and adding volatile markets can compound the feeling of uncertainty. In this article, I will share some of the concepts we have been discussing with our clients.
Read More
Strategic Wealth Partners Ranked In Milwaukee Business Journal’s Investment Management Firms List
Strategic Wealth Partners is proud to be listed in the Milwaukee Business Journal’s Investment Management Firms ranking. The list is ranked by firm assets under management from December 31, 2021. “We are so pleased to be included in this list of the largest investment advisors in the Milwaukee area. We first entered the Milwaukee market in 2018 because we saw tremendous potential to combine forces with some outstanding professionals,” says Principal and Co-Founder Neal Price. “Kathy Klein, Joe Thompson, and the entire Milwaukee team are best-in-class. We are excited to expand our presence and become the go-to firm for comprehensive wealth management services in the Milwaukee area.” “Our success comes from a solid and loyal client base who believes in our personalized solutions. Our work on behalf of our clients is far-reaching, but it all comes down to our unique process that is client focused, manages complexity, delivers simplicity, and guides our clients to their goals,” states Wealth Advisor Kathy Klein. Strategic Wealth Partners is an independently managed wealth management firm that has been partnering with clients since 2008 in Deerfield, IL, and since 2018 in Milwaukee, WI. For more information on services, please visit www.stratwealth.com.
Read More