Do you make charitable contributions from your IRA?

[kathiel]

2022 will be my first year of Required Minimum Distributions, so I am planning to make charitable contributions from my IRA, which counts toward my RMD.  I'd be interested in other's experiences with this.  Any problems?  Any recommendations? 

Thanks!

[yogibearbull]

There are several discussions on QCDs from T-IRAs at M*. Search results,
community.morningstar.com/s/global-search/qcd

[kathiel]

Thanks, yogibearbull, I did read those years ago.

[javajoe]

This is a very common tax efficient charitable strategy for those that qualify. It's a fairly established well-worn path and you shouldn't run into any issues as long as you know the basics. If you don't need the cash from the MRD's and are planning to be charitable anyway, it's kinda of a no-brainer and most of the major platforms make it really easy. Combining it along with a Donor Advised Fund as part of your overall strategy gives you lots of flexibility with respect to giving anonymously, setting up recurring grants, etc.

www.fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html

-JavaJoe

[yogibearbull]

There is a new complication in that QCDs can start at 70, while new RMDs bow start at 72. So, QCDs can be RMDs, but not always.

QCDs can supplement charitable activities from DAFs. But QCDs themselves cannot go into DAFs.

[javajoe]

Jan 13, 2022 17:58:23 GMT yogibearbull said:

There is a new complication in that QCDs can start at 70, while new RMDs bow start at 72. So, QCDs can be RMDs, but not always.

QCDs can supplement charitable activities from DAFs. But QCDs themselves cannot go into DAFs.

Yes probably should have re-worded that for clarity.  Use QCD's and a DAF both as part of your overall charitable approach, assuming you meet the basic qualifications. 

[kathiel]

javajoe, yogibearbull,

Thanks for your comments. I did read that money from QCDs cannot go into DAFs.
I've looked at the forms online for my brokerage. It does look pretty straight forward.

[Capital]

I am planning on being the charity to which the distributions from my IRAs are paid.

[javajoe]

Jan 13, 2022 23:10:50 GMT Capital said:

I am planning on being the charity to which the distributions from my IRAs are paid.

[yogibearbull]

Capital, but you are paying full taxes on that T-IRA "charity" to you.

[Chahta]

But gets the full benefit and pleasure of spending the balance he worked to get. I agree that giving to charity can be a good thing to do at times, I am not sure tax avoidance is a reason to give money away.

[kathiel]

This isn't about tax avoidance! One of my great pleasures is being able to give to charity. Having the money taken from my IRA simply makes it tax efficient. I feel fortunate to have enough money in my IRA to both support myself and give to charity.

[Capital]

Jan 14, 2022 13:38:31 GMT yogibearbull said:

Capital , but you are paying full taxes on that T-IRA "charity" to you.

Yes but I will be enjoying the remainder after all the taxes are paid.

[hondo]

Jan 8, 2022 18:26:08 GMT kathiel said:

2022 will be my first year of Required Minimum Distributions, so I am planning to make charitable contributions from my IRA, which counts toward my RMD.  I'd be interested in other's experiences with this.  Any problems?  Any recommendations? 

Thanks!

The wife and I make one or two QCDs each year. It has always worked out well with no problems.  I don't know about other investment firms, but if your TIRA is at Vanguard and you have automatic RMD withdrawals set up, as we do, there is one other thing you have to do.  The automatic withdrawals will remain the same even if you make a QCD, so you must reduce the automatic withdrawals by the amount of the QCD or you will end up withdrawing more than you may wish to.

I think QCDs are a very good way to give.  We don't do it just to avoid tax, because we were going to give the money anyway, but since we do not itemize our tax returns, this is a way to get tax credit for the donations.

Just another point of view.

Hondo

[kathiel]

hondo, Like you, this is the way we can get a tax credit for the donations. I realize that I should have been doing this earlier. I've been withdrawing money from my TIRA for several years, but this is the first year I have an RMD.