Qualified Charitable Distributions (QCDs) can be a powerful way for clients to meet their charitable giving goals while also reducing taxable income in retirement. In this training, we’ll walk through how to model a QCD in Voyant, step by step.
1. Prepare the Plan
Before modeling the QCD, navigate to the Taxes and Other Financial Information section of your client’s plan.
Ensure the “Use Standard Deduction” option is toggled off.
This allows the software to account for itemized deductions and reflect the full tax impact of charitable giving.
Once this is set, close the section.
2. Create a What-If Plan
To clearly demonstrate the impact of a QCD to your clients, create a What-If plan that models this strategy separately from the base plan.
Click Create What-If Plan
Give the plan a clear name, such as “QCD Option” or something relevant to your client’s scenario.
This allows you to easily compare the outcomes with and without the QCD.
3. Add the Charitable Giving Goal
Next, we’ll add a gifting goal to represent the charitable distribution.
Click the plus (+) button.
Select Goals → Gifting Goal.
Under Recipient Type, choose Charity.
Give the goal a descriptive name, such as “QCD Gift.”
Enter the desired amount.
This can be an annual, monthly, or one-time gift—whatever fits your client’s plan.
Under Inflation Rate, set it to 0% if you want the amount to remain constant.
You can also choose to use defaults or apply a different rate as appropriate.
4. Set Timing and Source
Define when the QCD will occur and where the funds will come from:
Under Timing, for example you could set the start event to the client’s retirement age and the end event to mortality.
You can create new events directly on the timeline if needed.
Under Payment Sources, select the client’s IRA account.
This step is crucial, it tells the software this gift qualifies as a QCD.Toggle on “Only Use Preferred Payment Source” to ensure correct tax treatment.
Click Done to save your changes.
5. Review the Plan in Year View
To verify that the QCD is being modeled correctly:
Open Year View and navigate to the first year the gift begins.
In the Cash Flow tab, you should see funds flowing out to meet the charitable distribution.
Under Expenses, confirm the Legacy Gift (QCD) and check that the Payment Source is your selected IRA.
Under Taxes, you should see the itemized deduction reflecting the charitable contribution.
6. Compare Plans
To demonstrate the impact to your client:
Go to Let’s See → Compare Plans → Chart View.
Select your QCD Option plan versus the Base Plan.
Review the difference in estimated taxes year by year, starting when the QCD begins.
You can also scroll to the end of the plan to view cumulative tax differences.
For example, your client may see $2.5M in cumulative estimated taxes with the QCD strategy versus $2.69M without it, a clear illustration of the tax savings over time.
7. Review RMD Impacts
QCDs can also help reduce Required Minimum Distributions (RMDs).
To show this:
In Year View, scroll to the client’s retirement years and open their IRA account.
Locate the Required withdrawal amount at age 75.
For instance:
In the QCD Plan, the RMD may be $29,944,
- While in the Base Plan, it might be $35,485.
This demonstrates how QCDs can lower RMDs and reduce taxable income in later years.
To watch a walk through of modeling QCD's