Tax-smart charitable strategy: QCD

Two of our favorite things - saving on taxes and giving to charity

Hello Megan,

Charitable giving and tax efficiency are two of our very favorite things at Watercolor Financial Group, which is why we are so excited to make sure you know about Qualified Charitable Distributions (QCDs)! QCDs are available for people with IRAs (including inherited IRAs) who are at least 70.5 years old. This distribution from an IRA directly to a charity not only benefits the charity, but also benefits the IRA owner, as the distribution is not taxed as income.

For clients who need to take required minimum distributions (RMDs) from their IRAs, yet do not need all of those funds, a QCD allows a portion of the distribution (as much as the client would like, up to $100,000 per year) to be directed to charitable organizations.

Here is a quick example to show what we mean. Harrison Ford will turn 81 this year. If he had an IRA valued at $1,000,000 on 12/31/22, he would need to distribute just over $51,500 in 2023. If he distributes that and puts it in his bank account, then it is all taxable as income. Since he is still employed, he may choose to gift all of that to his favorite charity, which satisfies his RMD, but does not add to his taxable income.

Clients who made a QCD in 2022, look for our email to you: For Watercolor Financial Group clients who made QCDs last year, one of our advisors sent you a letter that you may share with your tax preparer to ensure that your QCD is reported correctly on your 2022 tax return. If you have any questions about your letter or have misplaced it and need another copy, please let us know!

Sincerely,

Megan, Bleckley and Cass

The Safety of Your Cash Deposits After Two Bank Failures

With the recent failure of two large US banks, our asset management team has released a special update on the safety of cash deposits.

Watercolor Team -

Enjoying Taco Tuesday in the parking lot of our office at the Great Hills Plaza at 9600 Great Hills Trail. While we are so grateful to have connected with you all via Zoom these last few years, we'd love for you to visit us in person, too!

Access your reports - Visit our web page for links to Fidelity (for access to statements and tax documents) and to the Orion portal (for access to performance reports and billing statements): Watercolor Financial Group website

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Bleckley Dobbs, Cass Grange and Megan Poore provide advisory services through NWAM, LLC dba Northwest Asset Management, an SEC registered investment adviser. Watercolor Financial Group is not a registered investment adviser. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. This material is intended to provide general financial education and is not written or intended as tax or legal advice.