Older adults looking to give back and reduce their tax burden may find a solution with a qualified charitable distribution (QCD). QCDs allow individuals aged 70 ½ or over to make a direct transfer from their IRA funds of up to $100,000 per year as part of their required minimum distributions. This allows them to redirect income that would normally go to Uncle Sam directly towards donations instead, saving them money and helping out non-profit organizations in need.
Who is Eligible for a QCD and Why it is Beneficial
A QCD is an invaluable opportunity for specific individuals. While paying taxes on a distribution from an IRA can be costly and burdensome, qualifying for a QCD can provide individuals with the satisfaction of forming a connection with the organization they've chosen to support while enjoying potential tax advantages. It is important to note that QCDs have specific parameters; however, with the right amount of planning and research, they are an efficient way to maximize tax savings while simultaneously giving back.
Why It's Essential to Have an Estate Planning Attorney Help With a QCD
Having an estate planning attorney help with a QCD is essential. Estate planning attorneys are specifically trained to understand the nuances of QCDs and how it relates to one's estate plan, taxes, and other aspects of retirement. With their expertise in this area of law, they can ensure that taxes are taken care of properly and can assist in making sure the donations benefit both you and those you want to give to.
Whether you're just starting out or already have decades of giving experience, it's important to make sure that you take advantage of every legal opportunity available to increase your donations' long-term impact.