Schwab's New IRA Checkwriting Feature - An easy way to make charitable contributions from your IRA.

Bonnie Mole |

An element of the new tax law that went into effect the beginning of 2018 is the increase of standard deductions for both single and joint filers.  Although this can be positive for taxpayers, this may also greatly reduce the itemized deductions that many previously have been taking, including those for charitable contributions.

One way to reap a tax benefit from contributing to charity is to make the contribution directly from your IRA.  Distributions from a traditional IRA are taxable and if you are over 70 ½, you are required by law to take them.  If you make a qualified charitable distribution (QCD) directly from your IRA, these funds (up to $100,000) are not taxed.  Note that to be eligible to make QCDs from your IRA, you must be 70 ½.

Schwab has made this process easier with the introduction of its new IRA checkwriting feature.  These checks are expressly meant to be used for making charitable contributions and Schwab will be monitoring them for this use.  No federal or state income tax will be withheld from IRA check amounts regardless of tax withholding elections at the account level.

The checkwriting feature is not intended to support a high frequency of transactions and should not exceed five checks a month.

If you are a current client of Townsend Asset Management Corp., and would like to order checks for your account or need further information, please contact us at (919) 782-9689 or email