QCD Management Question

[DaveLeeNC]

For context my IRA is with Fidelity and my wife's IRA is with Vanguard. We make typically one (or sometimes two) four figure QCD distributions each year as part of our RMD obligations. Then we also make somewhere around 15 or 20 other donations through the year to mostly local charities. These are always relatively small ($75 to $250 range for the most part). But they clearly add up.

Other than having Vanguard/Fidelity issue 15 or 20 checks to us (payable to the various charities), is there a better way to handle this? In the past we have just paid these out of our post-tax dollars, but this is not a tax efficient path.

Thanks.

dave

 

[braumeister]

Other than having Vanguard/Fidelity issue 15 or 20 checks to us (payable to the various charities),

I just have Fidelity send my QCDs directly to the charities. No need to bother with anything sent to me.

 

[jebmke]

We aren't doing QCDs yet but we have 2 locals that we do large donations to. There are a significant number of other locals that we know are supported by our local community foundation so we make a one-shot donation to the foundation as our support for the small ones. I know the head of the foundation and I trust their processes to distribute foundation assets.

 

[pjm-7]

For ease of accounting, make a list of all of the smaller donations and then aggregate them into an every other year type donations. That would cut your check writing from say 20 to 10, then do them as QCD's. This could also help you assess if donating very small amounts align with your overall giving values.

 

[harllee]

I personally only do QCD checks for over amounts $200, just not worth the trouble for the smaller ones. For the smaller ones I just write a check from my checking account or put it on my charge card.

 

[rk911]

In addition to our tIRA RMD's going to our QCDs, we make periodic deposits into our DAF from which we make donations to a number of charities throughout the year.

 

[RAMingione]

Look into Fidelity Charitable Donor- Advised Fund. If it makes sense for you (funding amount is deductible but must be done with ideally highly appreciated non-IRA money), it is a good vehicle for dorecting those $25 to $250 gifts. Checks are sent l directly to your charity and you can set up recurring gifts if you wish.

 

[isisdave]

I do about 15 QCDs annually on January 2 from Fidelity, and it pretty much fulfills the RMD. I sometimes make some later in the year, particularly in response to things like famine relief, volcano eruptions, and the like.

If the charity already has my name and address, I have Fidelity send the check directly. If it's a charity I want to support, but am pretty sure they will put me on a list and then sell the list, I have the check sent to me, where I obliterate my address and send it on.

 

[DaveLeeNC]

Look into Fidelity Charitable Donor- Advised Fund. If it makes sense for you (funding amount is deductible but must be done with ideally highly appreciated non-IRA money), it is a good vehicle for dorecting those $25 to $250 gifts. Checks are sent l directly to your charity and you can set up recurring gifts if you wish.

I am pretty sure that you cannot use your DAF directed contributions as part of your RMD requirements as a QCD. Are you (maybe) saying here that I could use tax deferred dollars to fund a DAF and (while you would still be on the hook for your entire RMD) those DAF dollars would not be counted as income? Or are you saying something else here?

dave

 

[rk911]

My understandimg is that a withdrawl from a tIRA that the account owner designates as the annual RMD can be sent anywhere the owner likes...pay bills, buy a car or stick it in a piggy bank. In all of those cases the wirhdrawl becomes reportable income. But send that RMD to a DAF it is still reportable income but, as the DAF itself is a qualified charity, it may be deductible. However, if the RMD is donated to charity via a QCD the RMD is not counted as reportable income.

Money donated to a DAF is in and of itself a charitable gift. Disbursements from a DAF can be made over time at the owner's discretion wheras money sent to a QCD must be sent to a qualified charity immediately.

If I am mistaken please correct me.

 

[RAMingione]

I am pretty sure that you cannot use your DAF directed contributions as part of your RMD requirements as a QCD. Are you (maybe) saying here that I could use tax deferred dollars to fund a DAF and (while you would still be on the hook for your entire RMD) those DAF dollars would not be counted as income? Or are you saying something else here?

dave

 

[RAMingione]

Correct. DAF cannot be funded directly from an IRA as a QCD or as part of RMD. The DAF is however a useful vehicle to transfer from a taxable investment account especially if you are fortunate to have some stocks or mutual funds carrying hefty capital gains. You avoid any cap gain tax and you also get a charitable deduction, assuming you can fund enough to reach and exceed your Standard Deduction. Thus, if you normally use the standard deduction, you would need to be able to justify funding the DAF with an amount to reach and exceed the standard deduction - obviously with only the amount exceeding the SD earning you an incremental deduction. But you also avoid any cap gain tax on the transfered assets. If you can justify it, the DAF (growing tax free...) can then be used to fund many years of smaller charitable gifts when you don't want to bother with the QCD. I used the DAF many years before I was old enough for a QCD, but I continue to use it for regular monthly and less than $200 donations. May only need to fund it once! Hard to explain all, but hope this helps.

 

[TheWizard]

You can have Vanguard send you a checkbook drawn on the MM fund in your tIRA and do QCDs that way, $100 minimum I think ..

 

[oldtimer]

Does Fidelity have the option for a checkbook on an IRA?

 

[jebmke]

You can have Vanguard send you a checkbook drawn on the MM fund in your tIRA and do QCDs that way, $100 minimum I think ..

Of course, that involves a little more risk. If the check isn't cashed and the QCD is expected to be used to satisfy an RMD you have an issue since it isn't a distribution.