Qualified Charitable Distribution | Ed Slott and Company, LLC

Qualified Charitable Distribution

My husband and I set up a scholarship foundation at a college to which we donate money every year by transferring securities from our brokerage account.

My husband turned 70 this year (I'm not 70 yet), and although he doesn't have to take an RMD yet, he can still make a QCD from an IRA.

So the question is: For this year (and also next year, until he turns 72), is it better to donate from the brokerage account or as a QCD from an IRA account?

Thank you.

 It depends. A QCD in a non RMD year will not change the current year tax liability, but it will reduce the value of the IRA for purposes of determining future year RMDs. Donating appreciated sercurities from a non retirement account will provide a current year tax benefit to the extent the itemized value of the donation exceeds your standard deduction, so this benefit could vary considerably. You also avoid cap gains tax on the unrealized cap gain for the donated securities. However, when he turns 72 and is subject to RMDs, the QCD might produce more tax savings since it would reduce the taxable RMD.

 

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