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What Is The Best Way to Give to Charity?


What is the best way to give to charity? We go over some options for you this holiday season.

Full Transcript:

Hello, welcome to Arista Advice! Question of the week is: "Paul, what is the best way to give to charity?" It's an excellent question, and here we find ourselves at the end of the year, and many portfolios have gone through some up and downs for 2022, and some people have highly appreciated stock and other assets inside their portfolio.

Let me share with you a really cool thing that can be implemented to give to charity in a very tax-efficient way. It's called a qualified charitable distribution. A qualified charitable distribution has eight important ingredients that I just wish to share with you and talk with you about.
The first one is you must be 70 and a half or older to make a payment from your IRA to a qualifying charity.
Number two, the QCD must come from a traditional or inherited IRA, and you can only transfer marketable securities and cash. 
Number three, you can make a QCD up to $100,000 directly from your IRA to a qualifying charity, and it will be excluded from your taxable income. The limit of $100,000 is reduced by any IRA contributions after age 70 and a half. Contributions can satisfy the requirements for the owner's RMD from their IRA.
Number six, the distribution must go directly to a qualifying institution.
Number seven, your gift must be done by mid-December to have it successfully transferred to the charity. Once the qualifying charity and institution receives the money, then it's officially complete and has been transferred, and final, you must receive a confirmation then from the charity receiving this gift from you to them. There is not a qualified government form that recognizes and formalizes this transaction. Thus, it's goodwill, honor code, and a letter from the charity if you get audited. QCDs used to be temporary. There were always granted on a short-term basis from Congress as a Christmas gift to us. It wasn't up until three years ago that they've been made permanent, and they're a great vehicle.

The three great benefits of a QCD is it goes against your RMD, you get a tax deduction, and the institution gets a gift, and fourth, it does not count as taxable income by taking it from the IRA and then giving it to the charity. It can go straightly from your IRA to the charity, so four great benefits to always keep in mind. Hope this information is helpful. 

Please remember to go to AristaWealth.com to get other tools, tips, videos, and resources to help a life of significance.