Qualified Charitable Distributions Can Be Tricky
For Mark Roberts’ Use: Giving to charity feels good and makes a difference in the world, but it can also earn you a valuable income tax deduction. Of course, as with anything concerning taxes, strict rules and procedures apply to these donations, in order to be counted on your tax return. So, how can you give a gift to a favorite organization, without triggering extra trouble for yourself?
Qualified charitable contributions might be the answer. This type of charitable giving provision allows you to transfer funds straight from your IRA to the charity of your choice. And while the IRS has gone back and forth in previous years, over whether this type of gift is allowed, the good news is that qualified charitable distributions are definitely going to be counted for 2018 and going forward.
So now the question is, how do you perform this type of maneuver correctly, so that you’re eligible for the income tax deduction? Just remember these four steps:
- You must be age 70 ½ or older
- Submit a distribution form to your IRA custodian, asking for a check to be made payable to the charity you’ve chosen
- Ensure that no taxes are withheld from the donation (the charity must receive the entire amount)
- Send the check directly to the charity. Funds cannot land in your account first.
Keep in mind that the last step is a big sticking point with the IRS. If the funds land in your account and then you write the check, the money will be counted as your personal income and will not count as a qualified charitable distribution.
As with all financial and tax maneuvers, it’s important to follow guidelines carefully. If you have any questions about qualified charitable distributions, or any other financial planning topic, give us a call to schedule an appointment. We can help you sort through your options and decide upon the most tax-friendly ways to accomplish your goals.
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In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution.
Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies.
Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.”
Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.