I’m a little embarrassed to be so excited about this, but here we go:
Schwab is now providing charitably minded clients a checkbook for their IRA’s!
In the past, we were whipsawed by last-minute tax law changes on whether gifting required minimum distributions from an IRA would be tax-free or not. Now not only has the tax law been made permanent, but we have an easier way for you to make your gifts.
We see clients who are age 70 ½ and older doing this to pass along unwanted required distributions directly to their charities. This may also decrease their overall tax bill vs. distributing directly and then
This isn’t designed to be a high usage account, so Schwab is capping it at 5 checks per month for now. This is because taxes won’t be withheld like on typical distributions, so it’s not really meant to be for personal spending use.
If you would like to learn more about this or other giving strategies, please call or email.
Thanks for taking a look!
Tom Gartner, MSAPM, CFP®
New IRA Checkwriting Feature
To make it easier for your clients to make charitable donations from their IRA accounts, Schwab will roll out a new IRA Checkwriting feature on November 15, 2017, that will allow clients to write checks from their IRA account cash balances. The feature is intended to make it easier for clients to make charitable donations, but unlike a traditional checking account, it is not intended to support a high frequency of transactions.
Please note that if a client writes more than five checks in a rolling 30-day period, Schwab will send a courtesy communication reminding them that check amounts may be classified as a taxable distribution and informing them that we may remove the feature from the account if we determine the check transaction frequency is too high.
To enroll your clients in IRA Checkwriting, you can send them a paper application that will be available on Schwab Advisor Center®.
Please note that clients are responsible for any taxes due. No federal and state income tax will be withheld from IRA check amounts, regardless of tax withholding elections at the account level.
This article represents opinions of the authors and not those of their firm and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.