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As someone who has never done a QCD, this article by CPA Mike Piper (www.OpenSocialSecurity.com, Bogleheads speaker, etc.) was very helpful. Anyone with experience on making QCDs, IRS inquiries about QCDs, etc., have any wisdom or personal experience to add to this?
I have been doing QCD’s since 2019. Things can be a little quirky, let me explain. Vanguard has the entire process available on its website. In the first few years, they sent me the QCD actual checks, then I forwarded them to the Charity. In Fort Worth, TX I had to learn that a form is necessary for my Church to receive QCD’s. For my Church in MO I just give them into the office. So there are some variations. Also, in 2023 I found that some QCD’s are sent directly to the charity. If I receive a check I always PDF it, so I have evidence of the donation, if not I PDF the letter from Vanguard. In addition, I received letters from the charities, and from my church documenting the donations. It is convenient once you learn how it all works from the Vanguard website to the charity. When you do your taxes there is an entry for QCD on the worksheet and then the subtracts from the total RMD. Lots involved for these QCD’s, but well worth saving the tax.
We use a donor advised fund with Vanguard for part of our charitable giving. We will begin taking RMDs in two years, and I understand that we cannot transfer a QCD to a donor advised fund, but instead must donate directly to a charity. Does anyone know whether there has been a proposal to change this law?
As a non-profit executive, the organizations I worked for were grateful recipients of QCDs. And I would include a paragraph reminding donors of the opportunity in our fundraising letters. I have two suggestions:
1)Please make these gifts early in the year. The week between Christmas and New Year’s is a busy one for non-profits!
2)Alert the charity that the gift is coming. Brokerages do not include the names of donors—the stock just shows up in our brokerage account with no attribution. We once got a large gift from a QCD and despite repeatedly asking the brokerage, never learned who it was from. We had a small donor pool—I came to the belief that it might have been in error—that the DTC number was wrong and came to us instead of another worthy organization.
My RMD age is a couple of years away and you can bet the 10% of my gross income (now from SS and investments) that I’ve always given to charity will be via a QCD.
Dan, thanks for the reference to the article. Mike Piper’s articles are always very instructive. I’m still a few years from eligibility for QCDs but I’m glad to learn some of the tricks.
Rick, your welcome. I was glad to be able to learn from Mike Piper on this topic as well.