Giving is Good, Smart Giving is Great!

Matt Beardwood
Director of Wealth Management
Westover Capital

I’ve been fortunate for the life lessons I was taught by my parents. Both the big ones and the little ones. The one I have the earliest memory of is the one I learned the most from: Giving.

When we were young, we started volunteering as a family. My earliest fond memory of this was of our annual trip to the Boys & Girls Club to volunteer and sell Christmas trees in the tennis court next to the Clarence Fraim Club. That experience was the way the Beardwood family got into the Christmas spirit. Giving helps to pass along important values, informs family culture and fosters a sense of caring and responsibility.

Maybe the tree lot isn’t for you. There are other ways to get involved. A donation is the most certain way of helping the Boys & Girls Club.

Here’s an innovative technique that pays big benefits but few are talking about. It’s called the Qualified Charitable Distribution (QCD). Why hasn’t the QCD gotten much attention? That’s because for nearly 10 years Congress made this provision part of a package of their infamous “tax extenders” which would lapse only to be reinstated, usually at the eleventh hour, for another year or two. This on-again, off-again approach made intelligent charitable planning unnecessarily complex and tricky.

QCDs were first enacted under provisions of the Pension Protection Act of 2006 for a two-year period. In 2008 the Emergency Economic Stabilization Act (also known as TARP) reinstated and extended those rules through 2009. This pattern of lapses and retroactive reinstatements continued until the Protecting Americans from Tax Hikes (PATH) Act of 2015 finally made QCDs permanent. This is important because it allows for proactive and definitive planning opportunities going forward.

Generally stated, a QCD is a nontaxable distribution made directly by your IRA custodian payable to a charity chosen by you. Importantly, the IRS says that QCDs can be counted toward satisfying the required minimum distributions (RMDs) you must take from your IRA. That is, you can use the QCD to satisfy all or a part of your RMD for the year.

What does this tax-speak mean? If you really don’t need all of the annual income you get from the forced RMD coming out of your IRA with its federal and state income tax bite, you can direct a QCD to a charity instead and get the pleasure of seeing the charity you love enjoy your gift, income tax-free.

The mechanics as well as tax reporting of a QCD can be complex and confusing. Westover has guided clients in this endeavor for many years, and stands ready to assist. To determine whether this is a viable strategy for you, please contact a professional to review your individual situation and discuss what would be best suited for you.

Giving is good, but smart giving is great! If a cause or charity inspires you, consider a QCD to make the most of your generosity.  

ABOUT THE AUTHOR

Matt Beardwood serves as Director of Wealth Management at Westover Capital. Matt’s primary responsibilities include oversight and delivery of wealth management advice. In addition, he manages the development and implementation of firm-wide initiatives, strategies and best practices to deepen and broaden Westover’s client base. Matt has over 20 years of financial service and investment industry experience.

Matt is an active member of the Wilmington community, serving on the Board of Trustees of the Tatnall School (DE), the Providence Country Day School (RI), Boys & Girls Club of Delaware, and Vice President of the Board of Directors of Mass for the Homeless, Inc. He also serves on the investment committee of the Delaware Community Foundation.  Matt is an active Rotarian, previously serving as Director of the Rotary Club of Wilmington and Chair of the investment committee of the Rotary Club of Wilmington Educational Foundation. To learn more about Boys & Girls Clubs of Delaware, visit bgclubs.org

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