Qualified charitable distributions are a way for people over the age of 70.5 to donate to charity in a tax efficient way. Making charitable donations efficiently in a tax efficient way means you can save more for personal use or even just donate more to the charity of your choosing. Here’s how it’s done and what is optimal:
If you are nearing retirement age and have plans to be charitable – Stop donating money to charity
Individuals who are close to 70.5 are better served by utilizing qualified charitable distributions (or QCD’s) to donate to their charity of choice. By contributing appreciated stock from a traditional 401k, taxpayers can get the same tax benefit, but avoid having to report income from that distribution on the individual tax return.
Who is it good for?
- People nearing retirement age who want to be charitable
- People who tithe to a church
- People who have a large traditional 401k balance with sums of appreciated stock
- Anyone who plans to be charitable in their retirement and have a traditional 401k balance
How do I do this?
- Stop contributing to charities normally
- Contact your broker/401k manger and have them contribute only appreciated stock from a traditional 401k to the charity of choice (you will likely need to contact the foundation or church to get correct deposit info to provide to your brokerage.
If you are approaching retirement age, want to donate QCD’s, want a tax plan made, or just for more information – get booked for a call with your Booked Financial Rep
Be sure to follow our Facebook page for more guidance as it is released
This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Booked Financial LLC recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager. Depending on the nature of your business there are different variables that would make one option better than the other. Please understand these before choosing to deduct expenses under actual or standard mileage on your tax returns.
The content of this post is provided as educational information only and is not intended to provide investment or other advice. This material is not to be construed as a recommendation or solicitation to buy or sell any security, financial product, instrument, or to participate in any particular trading strategy.
This blog post was prepared by Dustin Wong in my own personal capacity. The opinions expressed in this video are my own and do not reflect the view of Booked Financial LLC.