The Cash Flow Clock: For Retirees - Book - Page 64
The Cash Flow Clock
or benefit from the growth. We are committed to
donating everything in the DAF, including the
growth.
Once we turn seventy and a half, the way we donate
to charity should change. We are now able to utilize
Qualified Charitable Distributions (QCDs) by
donating assets from our IRA (not 401k) accounts
directly to charity. These assets have not been taxed
yet. Because the assets are being given to a charity
(any 501c3) they are completely tax free. The QCD
is a distribution from our IRA that is tax free. We
don’t have to itemize our deductions to get a tax
benefit. We can take the full standard deduction. The
QCD simply doesn’t count as income.
Another benefit of the QCD is that it counts towards
our Required Minimum Distribution (RMD). As we
discussed previously, tax deferred money is tax free
as long as it is not withdrawn. In order to expedite
taxation on these accounts, the government requires
that withdrawals be made starting at age 73. RMDs
provide tax generation for the government and can
force taxpayers into higher tax brackets. Any
charitable donations made using a QCD makes the
RMD tax free (up to the amount donated). It is one
of the best deals in the tax code and can be used to
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