Advisor Insights

Strategic Giving

Helen Modly, CFP, CPWA

By Helen Modly, CFP, CPWA, and Jessica Jarosik, CFP, EA

One overlooked tax-saving strategy for charitably inclined individuals 70 1/2 and older is a qualified charitable distribution. Normally, come age 70 1/2, Uncle Sam requires all individuals who have diligently saved and reaped the benefits of tax-deferred retirement accounts to start taking required minimum distributions from such tax-advantaged accounts so these dollars can finally be taxed. RMDs are ordinary income, and this additional income may push clients up into a higher tax bracket and/or reduce their eligibility for credits and deductions. The QCD strategy provides a more tax-efficient way of making an impact on the charities that clients already donate to.