Offering benefits to both retirement investors and charities, QCDs (qualified charitable distributions), are a favorite topic of mine, especially when speaking with nonprofits or presenting to lawyers in continuing legal education programs. For those who don't know, QCDs are charitable donations made directly from IRAs.

First, let me address charities: Does your population of potential donors include IRA owners? Are any over age 73, the mandated age for starting to take forced withdrawals that are taxable as income (RMDs, or required minimum distributions)? These individuals may wish to avoid taxes on their RMDs while benefiting you, the charity, with a donation -- if only they knew about QCDs.

Now, donors: While donors can make QCDs at age 70 1/2, I'd like to talk with you if you are older (73+) and you have not taken your IRA's RMD yet for 2024. Have you thought of donating some or all of your RMD to charity? The QCD may save you money at tax time while also serving your charitable interests.

Put those two demographics together and you have a winning combination. The retired IRA owner wins. The fundraising charity wins. And the timing could not be better for this particular situation: If IRA owners have not taken RMDs for 2024 as of yet, November is the perfect time to arrange a QCD for 2024.

Potential Donors: According to IRS income tax statistics, there are millions (perhaps as many as 27 million) of QCD candidates based on age and IRA ownership (tinyurl.com/42y8e7rm).

Age: Unlike the age limit for RMDs, which has advanced via legislation since 2019 from 70 1/2 years old to the current age of 73, the age for making a QCD remains age 70 1/2.

Dollar Limit: The maximum upper limit for 2024 is $105,000, increasing to $108,000 for 2025. There is no lower limit.

The Charity Must Be Qualified: Use the IRS Tax Exempt Organization Search Tool at tinyurl.com/497um8xp to see if a charity qualifies.

Payment to the Charity: Payment must follow QCD rules. The governing statute (section 408(8)(B) of the Internal Revenue Code) mandates that the distribution be "made directly" to the charity "by the trustee" of the IRA.

Checks: Now that IRA trustees (custodians) offer check writing on IRA accounts, the question has come up about whether an IRA owner can simply write an IRA check to the charity.

That can work. "Writing a check, drawn from the account but payable directly to the charity, is functionally equivalent to the account owner requesting that the trustee issue a cashier's check payable to the charity," according to an IRS spokesperson.

What would not pass muster? "An IRA distribution, such as an electronic payment made directly to the IRA owner, does not count as a QCD. Likewise, a check made payable to the IRA owner is not a QCD" (tinyurl.com/mvjxezz9), according to the IRS spokesperson.

Checks at year-end: Follow QCD rules. If you don't, your "QCD" could fail. Be sure to engage your tax adviser and the charity of your choice that will receive your donation. Read IRS Publication 590-B at tinyurl.com/ysyp697p.

Time Pressure: It's November -- time for potentially millions of charitably inclined IRA owners, especially those 73 or older who need to do RMDs, to save on taxes while benefiting charities of their choice.

December: Don't wait until the last week of December. "Use of a check near the end of the year might run the risk that the transfer to the charity from the IRA is not completed before year-end," said Mark Luscombe, principal analyst at Wolters Kluwer Tax and Accounting. "The QCD must be withdrawn from the IRA before year-end, so the check has to clear before year-end." Also, be sure to get a written acknowledgement from the charity that it received the contribution.

A note to charities: If you and your team aren't familiar with QCDs, I'm happy to point you in the right direction as part of my pro bono financial literacy efforts. In addition, I have posted some resources on my website (https://juliejason.com/column-resources), including examples of nonprofits that offer donors the opportunity to do QCDs.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

The IRS has announced the contribution limits for 401(k)s and IRAs for 2025, but there's an additional factor this year for those who qualify and want to save more for retirement. The limits are detailed in Notice 2024-80 (tinyurl.com/3rsjw48u).

Defined Contribution Plans: Based on a cost-of-living annual adjustment, the maximum amount someone can contribute in 2025 to a 401(k) or other company retirement plan (403(b), 457 plan and the federal government's Thrift Savings Plan) will be $23,500, an increase of $500 from 2024's limit.

Catch-up: Someone age 50 or older can contribute an additional $7,500 (the same limit as in 2024), bringing the 2025 maximum to $31,000.

Special Age 60-63 Catch-up: New for 2025 is a special catch-up for participants between the ages of 60 and 63 under a provision of the SECURE 2.0 Act of 2022 that takes effect in 2025. (Please note: Not all plans have the catch-up feature.) For those who are eligible, their catch-up contribution will be $11,250 instead of $7,500, making the contribution limit $34,750 instead of $31,000.

Overall Limit: When you add employer contributions, the limit in 2025 is $70,000, up from $69,000 in 2024. This limit captures both employee and employer contributions (but not catch-up contributions).

A reminder of a SECURE 2.0 Act provision that is NOT yet fully in effect is the one requiring that catch-up contributions for higher earners (more than $145,000 in the previous year) be designated as post-tax Roth contributions, not as pre-tax contributions. IRS Notice 2023-62 (tinyurl.com/39jjufm7), released in August of 2023, indicated there would be "an administrative transition period" of two years after Dec. 31, 2023, in relation to the requirement.

IRAs: As for IRAs, the limit on contributions remains the same for 2025: $7,000. The catch-up contribution for those who are 50 and older is also unchanged at $1,000 for 2025, bringing the total to $8,000.

Tax-deductible IRAs: Deductible contributions to traditional IRAs are based on MAGI (modified adjusted gross income). Briefly, to take a tax deduction, the MAGI must be below a certain amount. Different limits apply if the taxpayer or his or her spouse participates in a 401(k). For example, a single person's MAGI is $89,000 if the taxpayer is a 401(k) participant; there is no MAGI limit if the taxpayer (or his or her spouse) does not participate in a company retirement plan.

Roth IRA Contributions: In order to be eligible to contribute to a Roth IRA, MAGI must be below $165,000 (single and head of household) and $246,000 (for married couples filing jointly).

If you are wondering how many people have traditional or Roth IRAs, research released in 2024 by the Investment Company Institute reported that as of year-end 2023, more than 24% of U.S. households had a Roth IRA (31.9 million households). In contrast, 31% had a traditional pre-tax IRA (41.1 million), and overall, 42% of households (55.5 million) had some type of IRA (tinyurl.com/4v3j56zr). The combined IRA assets total $13.6 trillion.

Saver's Credit: The IRS also announced limits for the Saver's Credit (aka the Retirement Savings Contributions Credit), a retirement savings tax credit that is available for lower- and middle-income taxpayers.

The income limit for 2025 is $79,000 for married couples filing jointly, which is an increase from $76,500 in 2024; $59,250 for heads of household, up from $57,375; and $39,500 for single and married individuals filing separately, up from $38,250.

You can find more information on the IRS webpage featuring the Saver's Credit: tinyurl.com/4euvfj8e.

Finally, if you are interested in making a qualified charitable distribution (QCD), the limit in 2025 will be $108,000, up from $105,000 in 2024. Keep in mind that you must be over age 70 1/2 to make a QCD. If you would like to read more about QCDs, email me (readers@juliejason.com).

With the guidelines for 2025 now revealed, you will want to consult with your tax adviser on how these limits relate to your financial plans, as each person's tax situation is unique.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION

Do couples know that wives will likely outlive their husbands? As reported in a National Bureau of Economic Research Paper (tinyurl.com/6yfx4ep3), widows are expected to outlive their husbands by more than a decade (12.5 years).

Knowing this, should couples talk about the future? Should they prepare for financial, tax and legal questions that need to be understood by the survivor?

In my practice, the future is a natural part of open discussions, usually including tax and legal considerations. But outside of my practice, I see couples who need to talk but don't. That's frustrating for me personally, since just being aware of things that can go wrong would help avoid mistakes.

This is not a gender issue, but it can turn out to be so. It has to do with who makes the financial decisions in the household. Who does the taxes? Who invests? Who has the relationships with the accountant, the estate planning lawyer, the financial professionals and, in the case of the high-net-worth, the family's money managers?

If the survivor is not the decision-maker, he or she will likely be lost in a sea of uncertainty when it comes to finances and taxes.

Accountant Jackie Spagnolo, managing director of Andersen Tax of Stamford, Connecticut, recounted a story about a client in her 50s whose husband died unexpectedly. Her husband had a strong connection with the couple's accountant, but once the husband passed away, the new widow felt alienated. She and the accountant didn't connect properly. The widow felt her voice wasn't being heard. She wasn't comfortable asking questions. In fact, she actually felt as if she was being kept in the dark.

That's a good example of a problem that can be avoided with some planning by both husband and wife. The answer is for both spouses to be comfortable with the family's financial, tax and legal advisers.

But what about someone who has no interest in getting to know advisers, or in investing or finances? This question came up in a joint presentation that I gave with Spagnolo last week to a small group of women. (If you would like to be invited to future presentations, let me know at readers@juliejason.com.)

For example, what about a conversation with the family's tax preparer? It may be difficult for someone with no experience to ask questions.

Spagnolo offers this advice: "Don't be intimidated to ask questions. Tax concepts can be complicated, so be sure you understand what your accountant is proposing during any planning or consulting calls. No question is too small."

If that sounds difficult, you can get help in advance of a dialogue with the tax preparer. I asked Spagnolo if someone could retain her to review a tax return that has already been filed, and yes, indeed, that is possible. By doing that, you can ask anything that comes to mind. Problem solved. Be sure to find someone with whom you can easily communicate.

Spagnolo added that planning for the future is equally important: "Ask your accountant for a summary of planning ideas that you can take home with you after a meeting to digest what was discussed and come up with follow-up questions you may have."

Spagnolo also recommends meeting with your accountant at least quarterly. "Communication is important. It helps establish goals, discuss objectives or even manage cash-flow expectations. It also builds the relationship between you and your accountant. Your accountant will be very much involved in your financial situation. Tax blends through to family relationships, and having more open communications can help your accountant fully understand your objectives and what's important to you," explained Spagnolo.

The same holds true for lawyers and financial advisers.

Over the years, I've seen families sidestep the big issues that future widows will face even when the couple is aware of a life-threatening illness. It's just a hard conversation to have. Who wants to face mortality -- or the potential loss of a spouse to divorce or incapacity? Just imagine how much more difficult it will be after the fact if not prepared.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION