Donations are a wonderful way to support the causes you care about, but when it comes to charitable giving, deciding how to donate your funds can be just as important as choosing the right organization to help. Some options provide extra tax benefits, but they often come with additional paperwork or financial complexities that call for careful planning. Understanding these trade-offs will help you make sure that your contributions have the greatest impact on both the charities you love and your future finances. 

 

In the sixth installment of our Charitable Giving series, financial advisor Marie St. Clare discusses the advantages and disadvantages of Qualified Charitable Distributions, or QCDs. A QCD lets you transfer funds directly from your traditional Individual Retirement Account (IRA) to a qualified charity, excluding those distributions from your taxable income.  

 

This can be a powerful strategy if you’re looking to maximize tax benefits while fulfilling your philanthropic goals – under the right conditions. Log in to Sensible Friends to access the full article and see if QCDs are the best fit for your charitable giving plan. 

 

What you’ll learn: 

• Excluding QCDs from taxable income can simplify your approach to charitable giving – especially if you don’t itemize your deductions. 

• The key requirements of QCDs, and how they interact with your IRA 

• How QCDs impact your Required Minimum Distribution in retirement age. 

• Why QCDs may be more cumbersome than other donation options, like Donor Advised Funds 

• The paperwork you’ll need to receive a full tax benefit 

• Why QCDs don’t eliminate capital gains  

• Making Roth contributions instead of Traditional IRA contributions might be better for a QCD strategy. 

 

Interested in learning more? Log in to Sensible Friends now to read the full discussion on the pros and cons of QCDs.