Qualified charitable distributions (QCDs) don't usually come up in conversations with family members or friends, and I haven't come across a reality show that incorporates QCDs into the average older person's daily life. ("Dancing With QCD Stars"?)

We've talked about them recently, but here are some additional things to think about.

In order to really understand why QCDs might be a reality in most older IRA owners' lives, consider this simple premise: Do you want to donate to charity? Do you have an IRA in the RMD (required minimum distribution) phase? Do you want to avoid paying taxes on RMDs?

If that's you, think about turning your RMD (or part of it) into a QCD and avoid paying taxes on the portion that goes to charity as a QCD. You have to want to donate to charity for the QCD to make sense. Tax savings alone won't do the trick, since you're saving taxes on the amount you give away.

If you want to do the numbers, try the AARP tax calculator at tinyurl.com/yc25wc2h.

Of course, there are rules to follow to make the donation to charity a tax-free withdrawal of IRA money:

1. You need to be age 70 1/2 or older.

2. The money that goes to charity needs to be transferred directly by the IRA custodian (not you) to the charity.

3. The money needs to be received by the charity before the end of the year.

4. The charity needs to be a "qualified" charity. (Use the IRS Tax Exempt Organization Search Tool at tinyurl.com/497um8xp to confirm if it is.)

These are the general rules that must be followed to avoid being taxed on the IRA withdrawal, and you can find them online on the IRS website at tinyurl.com/yc2sjjv3.

There's one other rule you should be aware of -- the "first dollar rule," which is found in Treasury Regulation 1.402(c)-2, Q&A-7 (tinyurl.com/me4hw2ep). This regulation states that "if a minimum distribution is required for a calendar year, the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9), to the extent that the total required minimum distribution under section 401(a)(9) for the calendar year has not been satisfied."

Thus, if the first distributions from your IRA in a calendar year in which there is an RMD (currently age 73) are QCDs, they will first be used to satisfy the RMD for that calendar year. And if you don't need your RMDs, this can be a method for donating to a charity (up to $105,000 in 2024) and avoiding taxes on the RMD.

The definition of a "charity" goes beyond more well-known names like the American Red Cross and the Salvation Army. For example, a college like the University of Central Florida provides information on its website for how to do a charitable distribution from an IRA, including a Letter of Intention form and the ability to search IRA custodians to request such a transfer (tinyurl.com/mrx3k845).

Another example, this time from the field of health care: The University of Kansas Health System, a nonprofit, academic medical center, provides information on how to donate using a QCD (tinyurl.com/3wz67y6u).

You can also donate through a QCD and get lifelong income back. It is known as a "split-interest entity," something I wrote about last year (if you would like a copy of that column, reach out to me at readers@juliejason.com). There are limits on the amount ($53,000 in 2024) and the frequency (you can only do one split-interest entity in a lifetime), so you'll want to explore the details and confirm that the charity of your choice offers this option.

A QCD allows you to manage your RMDs and support your charitable interests. If you are considering one for this year (30% of annual charitable giving occurs in December, according to the website Nonprofits Source -- tinyurl.com/37y37h84), be sure to take action as soon as possible so your gift will be processed by your IRA custodian before year-end. The best case for a QCD is someone who wants to benefit charity and is required to take mandatory withdrawals from his or her IRA, even small amounts.

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In a previous column, I discussed that the federal estate tax exemption is set to undergo a big change -- increasing the number of estates that will be taxable on a federal level -- after 2025, unless Congress acts to extend the current law.

Now that the presidential election is behind us, some believe that beginning in January, we will see movement to extend the exclusions that were originally adopted in the 2017 Tax Cuts and Jobs Act.

If Congress does not act before the end of 2025, the exclusion amount (the amount that passes to heirs free of federal estate taxes) is estimated to revert to roughly $7 million from its current level (the 2024 exemption is $13.61 million; the 2025 exemption is $13.99 million).

Law firms are talking with clients about being prepared in case there is a reversion to the lower exclusion amounts. If you are in the position of having a large estate, should you be thinking of taking action before the end of 2025?

Cummings & Lockwood LLC, a law firm based in Connecticut and Florida, offered the following examples of individuals who should talk with their lawyers about possibly making gifts to reduce their estates. I'm quoting from the firm's 2024 Private Clients Annual Update (tinyurl.com/3wr3f3bw):

-- "Clients who are certain they will never need the gifted assets and can maintain financial independence without those assets and the income they may generate.

-- "Clients who are confident the gifted property will appreciate in value before death.

-- "Clients who believe that federal tax exemptions will be reduced below the current level for a prolonged period.

-- "Clients who are willing to gift the entirety of their exemption now, or at least the majority of it. Because the exemptions may be decreased later, you must give enough now to use what might be taken away."

When considering the type of gift, Bank of America Private Bank, formerly U.S. Trust, offered:

"The simplest strategy is a direct gift of cash, securities or other assets with a value up to the lifetime exemption. Keep in mind that you have other avenues for tax-advantaged gifting beyond that. You can, for instance, use the annual gift tax exclusion -- $18,000 in 2024, $36,000 for couples -- to make yearly gifts to as many people as you like." See "Could potential tax law changes have an impact on your estate?" (tinyurl.com/yc6wy79h).

Elizabeth Falkoff, Esq., a principal with Cummings & Lockwood, adds, "Look at your assets -- what are you comfortable giving away and living without? What assets have the opportunity for the most growth potential?"

Savings in taxes can be significant. Law firm Husch Blackwell LLP, in a Thought Leadership article, offered an example of the possible difference in estate taxes (tinyurl.com/u2sv3w76):

"Imagine you have a $20,000,000 estate in 2024 and utilize the $13,610,000 exemption to its fullest. If you were to pass away in 2024, your taxable estate at death would be $6,390,000. With the estate tax rate at 40%, your estate will have a tax bill of $2,556,000. The portion of your estate passing to your loved ones would be $17,444,000.

"However, if you didn't take advantage of the exemption in 2024 and waited until 2026 when the estimated exemption drops to $7,000,000, you would have a taxable estate at death of $13,000,000. By using the same 40% tax rate, your estate would have a tax bill of $5,200,000. Therefore, the portion of your estate passing to your loved ones would only be $14,800,000."

Remembering the big picture is always a good strategic approach. "Evaluate any proposed transfer against all of your financial goals. Is this a gift that you would make regardless of tax rules?" suggests Northern Trust's "Are You Prepared for Sunsetting Estate Tax Exemptions?" (tinyurl.com/49tskp8j).

As with many big picture exercises, this type of planning does have a deadline. Meet with your lawyer soon to explore possibilities.

If you would like to attend a discussion forum on this topic in Greenwich, Connecticut, with Elizabeth Falkoff of Cummings & Lockwood, please contact me for details at readers@juliejason.com.

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If you want to find out about the disciplinary history of the investment firm or the individual who handles your money, how do you go about it? How difficult is it to find the information?

One way to do this is to look for the CRS (Client or Customer Relationship Summary) on the firm's website. The CRS is a U.S. Securities and Exchange Commission-mandated disclosure document of either two or four pages, depending on the firm's business model.

Let's use a large, well-known firm as an example. Go to the Merrill Lynch website (tinyurl.com/y27pzpke). Look for this line: "For more information about our brokerage services and investment advisory programs, see ml.com/CRS."

Once you open the CRS, look for the "disciplinary history" section. In the case of Merrill's four-page CRS (dated March 22, 2024), on the fourth page, highlighted in dark blue, you'll see this question: "Do you or your financial professionals have legal or disciplinary history?" If the answer is "yes," the CRS states: "Please visit Investor.gov for a free and simple tool to search for us and our financial professionals." Investor.gov is a website maintained by the SEC.

You would think that the link would open up the firm's disciplinary history (the SEC should make this easier). Look for a large picture box titled "Check Out Your Investment Professional." In the box's search bar, you'll enter the name of the firm or an individual.

To find Merrill's disciplinary information, simply entering the search term "Merrill" won't get you what you want. Nineteen results populate the dropdown menu. Choose "Merrill Lynch, Pierce, Fenner & Smith Incorporated."

Click on the profile in the dropdown menu, where you will find two "Get Details" links. Since Merrill is a dual registrant, you'll see "Investment Adviser Firm," which opens Merrill's Investment Adviser Public Disclosure (IAPD) profile (tinyurl.com/ms58cvm3), as well as "Brokerage Firm," which directs you to Merrill's BrokerCheck profile (tinyurl.com/mbkm8uwe).

Dual registrants are regulated under two different statutes -- one for broker-dealers, the other for investment advisers. A single financial professional working for a dual registrant can also be a registered representative (broker) and an investment advisory representative.

Customers need to be aware of the distinction, a subject I covered in my latest book, "The Discerning Investor." Write to me (readers@juliejason.com) if you would like me to discuss this topic in a future column.

To find the disciplinary history for a company's investment adviser services, on the IAPD profile you can:

1. Select "View Form ADV By Section" in the menu on the left-hand side of the webpage. Then select "Item 11: Disclosure Information" for a general review of disciplinary history. For more detailed disclosures, select "DRPs" (Disclosure Report Pages).

2. Click "Part 2 Brochures," which takes you to a page with links to download firm brochures (ADV Part 2A).

For the disciplinary history of a firm's brokerage services, you can download a "detailed report" from its BrokerCheck profile that will inform you of disciplinary actions under "Disclosure Events."

The Disclosure Events section states that "All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal or civil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved."

Each disclosure is listed separately, including the status of the disclosure (pending, on appeal or final), the allegations related to it, the resolution and any possible sanctions.

You will want to take your time reading through the listings, as they can provide some insights into a firm's culture. The same goes for an individual. You're looking for patterns.

Going back to Merrill's CRS, you'll see an "Additional Information" section after the disciplinary history. It offers a copy of their Best Interest Disclosure Statement, which "provides information about the scope and terms of the brokerage services" Merrill offers, describing "approach, services, fees, compensation and conflicts of interest" (tinyurl.com/3nerd8j3).

Again, researching this information does take time. The tools provided may not seem intuitive or user-friendly, and the process to access this information may often seem unclear, especially if you are unfamiliar with this industry. Disclosures can be lengthy, with some over a thousand pages. However, it is your money that is involved, so the time is worth it.

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