The Future of Charitable Giving


In the financial world, 2018 was an eventful year – starting with the most sweeping tax reform in decades.

The reform had a lot of positive impacts, but I think one unintended consequence was the impact on charitable giving. Because of the new standard deduction, it’s estimated that only 16 million taxpayers will able to make a deduction for their charitable contributions. That’s down more than 50 percent from when the standard deduction was not as high and more people itemized.1

Many charities will likely see reduced gifting because donors lose the financial benefits of making a donation. However, a few outlets have been talking about a unique gifting strategy – Qualified Charitable Distributions, or QCDs.

QCDs aren’t new. They’ve just been out of favor – or at least unknown – for some time. Previous tax brackets and limits for itemized deductions made this strategy less favorable. Today, with a higher standard deduction for individuals and older couples, QCDs will become much more valuable for charitable contributions.


If you’re not familiar, here’s how QCDs work:

  • Your clients send their required minimum distributions (limit $100,000 per person) to a charity
  • The distribution is tax free – that’s an important distinction
  • The QCD does not go into the calculation for Modified Adjusted Income or Combined Income, which are used to calculate annual tax on Social Security income, and also affect the amount of premium a client pays for Medicare Part B health insurance

For retirees, the result can be hundreds to thousands of dollars in tax and premium savings. Using this type of charitable contribution allows your clients to continue benefiting their favorite charity without taking a hit to their personal finances.


Winning Strategy

2019 is new ballgame. New tax laws. New regulations. New strategies. Try a new way to help clients with Qualified Charitable Distributions.

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at


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1Tax Foundation, “Nearly 90 Percent of Taxpayers Are Projected to Take the TCJA’s Expanded Standard Deduction,” September 2018:

Retirement QCDs Charitable Giving

The great debate: CDs vs. Annuities


When looking for safe investment options, many investors look to CDs, especially when equity investments are on the downturn. Many seem to think CDs are the only option that can provide safety and guaranteed growth. However, tax-deferred annuities compare very favorably to CDs, and investors should review both products’ features to help determine which is best suited for their financial situation:

  • Tax Savings – Annuity gains grow tax-deferred, while interest earned on CDs is taxed and reported annually as ordinary income. Taking advantage of tax deferral will increase your earning power by continued annual earnings on your tax savings.

    Earnings on annuities are taxed as ordinary income when withdrawals are made. However, you do have an option to spread out the tax burden for non-qualified money through guaranteed income payments, where payments are partly return of non-taxed cost basis.

  • Earning Power – As of October 2014, the average return on a one-year CD was 0.26 percent, and the average for a five-year CD was 0.83 percent. 1 At the same time, the average five-year fixed annuity rate was 1.63 percent2 – a tax equivalent yield of 2.26 percent, based on a 28 percent tax bracket.  

    Investors could also take advantage of tax-deferred indexed annuities to provide even more earning potential. These products include many indexing options, including un-capped strategies, with no downside risk to principal.

  • Lifetime Income Options – Tax-deferred annuities offer guaranteed lifetime income payments through annuitization or lifetime income riders. These are great retirement planning tools that generate income that you can’t outlive. CDs can be liquidated as they mature, but there’s no guarantee the funds will last a lifetime.

  • Liquidity – Annuities allow up to 10 percent of the value to be withdrawn without penalty. With CDs, withdrawals prior to maturity are generally subject to penalties.

  • Payment at Death – Annuities can help avoid probate by paying funds directly to the beneficiary. CDs, however, are subject to probate, along with possible costs and delays.

The Bottom Line: CDs aren’t the only safe investment option available. Make sure your clients see how the features of an annuity compare and can potentially offer them more benefits. 



CDs Annuities