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Connie and I just had our annual financial meeting- how best to give money away.
Every since I discovered QCDs – you know what that is, right, I enjoy avoiding taxes on a RMD.
As long as I have to take the money out of my IRA, I like putting it to good use – tax-free if possible.
Where does it go? A chunk goes to church and several religious organizations- Connie’s call.
We give to a food pantry on Cape Cod and one local. Colonial Williamsburg receives an annual gift as does St Jude’s Children’s Hospital.
We divide about 20% of the RMD among our children. From what’s left I take withholding for all the taxable portion of the distribution and transfer the meager balance to a money market fund.
We’re done for another year with the hope the stock market will replenish it all. So for, so good.
There is one flaw in our otherwise sound plan. During the year there are numerous request from local organizations like volunteer firefighters, the PBA, Scouts, schools, etc. and Connie makes good use of the account designated Connie’s checking. The flaw, they aren’t tax-free or deductible, because we use the standard.
Nevertheless, we feel it’s money well spent or rather well used. It’s good being 80 something and able to give.
QCDs are a great way to give! One small word of caution: when you’re using QCDs, you’re responsible for making sure that everything’s documented properly. Meaning, you’ll still need a letter from the charity stating you’ve received nothing in return for your donation (just like you would if making any donation and deducting it), and you’re responsible for making sure the check is cashed. You don’t want to find yourself in a pickle if that check you sent in November somehow gets lost. For this reason, QCDs early in the year might be a good option overall.
Thanks, Dick, and all the others who have recommended a QCD. This will be my first year taking RMDs, and the same day this was posted (but before I read it), I wrote to my financial planner telling her that this is what I want to do with most of the RMD. Like Connie, I write a number of small charitable checks during the year, and I’ve also decided not to worry about the taxes I will pay on that money. Even though I don’t manage my own portfolio, I’ve learned so much about personal finance in the four years that I’ve been reading HD. I’m very grateful to Jonathan, but also to you, Marjorie, Kathy, and so many others too numerous to mention!
Linda, feel very honored to know that I may have helped you in some small way. Thank you.
Richard,
Thanks for describing your strategy!
This post gets bookmarked for when we have to start taking our RMDs.