October 15, 2019

Once retirement account owners reach the age of 72, they are required to take out percentages of their pre-tax accounts every year. Required Minimum Distributions – better known as RMD’s – are mandated at 72 because the Government wants to take in tax revenue on that money. Tax-deferred saving can be great for growth potential because, thanks to compounding, money can be made on money that would have been paid to the Government in taxes. There is a way to avoid paying taxes on RMD’s. This tax break is called a Qualified Charitable Distribution or QCD for short. Some or all of an RMD amount up to $100,000 per year can be donated to an eligible charity instead of taking the distribution and paying income taxes on the amount. QCD's do not get counted as charitable contributions for itemization, but the tax savings from the income exemption is generally greater than a charitable contribution deduction would be.  For retirement account owners who routinely give charitable contributions, QCD’s may make good sense. Contact me for more information. ~


This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. LPL Financial and Waddell & Reed do not offer tax advice or services.  Please consult with the appropriate professionals regarding your personal situation prior to making any financial related decisions.