Broker Check

Charitable Contributions

| August 13, 2020

The CARES Act of 2020 has suspended RMDs for owners of retirement accounts. The goal is to give investors the option to allow their retirement accounts to remain invested and potentially recover any losses. However, retirement account owners still have the option to take distributions, whether for income or to make Qualified Charitable Distributions (QCD). 

The QCD is a strategy that allows retirement account owners who are over age 70 ½ to direct their RMD towards a qualified charity without paying income taxes on the distribution.  For some, this is the preferred method to make charitable donations as the QCD provides the greatest tax benefit.

Those who historically have utilized the QCD strategy but want to suspend their 2020 RMD are still able to donate goods, cash, or even appreciated stock.  These types of donations would be reported on Schedule A and are still subject to certain tests and may or may not provide a tax benefit depending on the other deductions reported on the tax return.  In the case of donating appreciated stock, taxpayers may receive the extra benefit of avoiding capital gains tax on the amount donated.  We recommend reviewing your charitable contribution strategy for 2020 to determine the best strategy based on your current tax situation.