Once you reach age 70 ½ you need to start taking required minimum distributions (RMDs) from your IRA each year. There’s a simple formula to determine how much you need to take. Then you just withdraw the money and—here’s the important part—pay the taxes. Until recently, there was no way around those taxes. Then Congress changed the rules to allow people to make tax free charitable donations directly from their IRAs and count those donations toward their RMDs. These are called Qualified Charitable Distributions (QCDs). Here’s how they work.
If you have an RMD due, rather than having the money distributed to you, instruct the IRA trustee to send the money directly to a qualified charity. The distribution will count toward your RMD and the IRS will exclude it from your taxable income. You can exclude up to $100,000 per year. If married and you file a joint return, your spouse can exclude an additional $100,000.
These distributions are particularly appealing after the recent tax law changes. The standard deduction was raised considerably, which means many people will no longer itemize and deduct their giving. The QCD allows you to still get a tax benefit for your charitable giving even if you don’t itemize.
A few things to keep in mind:
You must be at least 70 ½ to make a QCD.
The QCD must be a distribution that would have otherwise been taxable.
The distribution must go directly to the charity. If you distribute it to yourself and then give it to the charity, it counts toward your RMD, but it does not count as a QCD.
QCDs are excluded from your taxable income, so you can’t double dip and also claim them as a charitable contribution on your tax return.
You can make a QCD for up to $100,000 even if your RMD is less than that.
A QCD cannot go to a private foundation or donor-advised fund.
Apparently I can travel faster than I can write. I made it home Tuesday in the small hours of the morning, but I still have several articles I want to share with you including about my time in Italy and Germany as well as my reflections on and lessons from the trip. I’ll send those your way over the next week or so. Thanks so much for following along and keeping me company over 18 days and 25,000 plus miles. It was a fun experience!
After wrapping up my time in France, I took an early morning flight to Naples, Italy where I had a car service waiting to drive me about an hour and a half to a little seaside town on the Amalfi Coast called Positano. During the planning stages of the trip I read that parking a car in Positano is a difficulty on par with splitting the atom, so I decided to save myself the frustration and just use the aforementioned car service. The cost was surprisingly reasonable and talking to the different drivers (I used it for several trips) about the economy, politics, their families, the culture and more was a kick. Plus, the guy who picked me up from the airport was named Fredo so I instantly felt like I had been dropped onto the set of The Godfather (best movie ever).
When we arrived in Positano, I was reminded of a line from Orwell’s Down and Out in Paris and London where he described the houses on the narrow street where he lived as “lurching towards one another in queer attitudes, as though they had all been frozen in the act of collapse.” Imagine pushing an entire town over a steep cliff and then somehow freezing the picture as the houses, buildings and roads spilled toward the sea. That is Positano. It’s beautiful, but it seems to defy the laws of physics.
Fredo dropped me off at the Hotel Marincanto where I checked in with the usual questions (Just you? Is that backpack your only luggage?) and then found my way to the hotel restaurant for lunch. It’s hard to imagine a meal with a better view. My table was outside on a veranda that was covered with flowers and lemon trees (Limoncello originated on the Amalfi Coast) and looked down the hillside at the crashing waves below. My waitress was a friendly Italian woman who age-wise could have been my mother and who, like my mom, took joy in providing a good meal. I ordered the ravioli and a beer. She asked me what kind of beer and I told her to surprise me. “Ah, Peroni for you,” she said. When I later complimented her on her choice of beers, she brought me another, gratis. Smiling, she said: “Is good, no?”
Stomach full, I decided to do a little exploring. As you might imagine from my earlier description, walking the streets of Positano is like doing a Stairmaster workout with the machine on “Everest” mode, but the shops and scenery reward you for the effort.
The itinerary for Italy was designed to give me a little downtime after the breakneck pace of Hong Kong and France. I had four days instead of three and the only scheduled activity I had was a tour of Pompei and Mount Vesuvius. The rest of the time was earmarked with exploring Positano, hiking the paths above the town and working. A typical workday started with breakfast and cappuccinos in the hotel restaurant and then writing, answering emails, calling clients and running trades in my makeshift office on the balcony outside my room.
Makeshift office on the balcony outside my room.
Pompeii and Vesuvius
Visiting the ancient Roman city of Pompeii and the volcano that buried it meant taking a day trip back into Naples. After the solitude of Positano, Naples felt raw and frenetic. I met the tour group near the train station and we took a small bus to Pompeii. Vesuvius erupted in 79 AD, burying the town in 20 feet of volcanic ash. Heat was the main cause of death, however, with temps reaching nearly 500 degrees Fahrenheit as far as 6 miles away from the crater.
The ash preserved the town, leaving people and animals frozen in time. The bodies eventually decomposed and left voids in the ash that excavators—hundreds of years later—filled with plaster. The result were eerie 3D casts that tell the story of those panicked final moments. After the tour we walked to a local restaurant for pizza (which originated in Naples) and then took the bus to Vesuvius. From the parking lot it was about a mile hike/climb to the top where steam vents remind you that the volcano is still active (it last erupted during WWII) and where you can see Pompeii off in the distance.
Path of the Gods
I got up early the morning after Naples and worked until about 3 pm. With a few hours of daylight remaining, I hopped the local bus and road it to the final stop in the Nocelle neighborhood at the very top of Positano. There is a trail there called the Path of the Gods (Il Sentiero degli Dei) that links Positano with the tiny hilltop town of Agerola. With my limited daylight, I couldn’t hike the entire thing, but I did enough to recognize that the path came by its name honestly. The views were really breathtaking. After returning to Nocelle, I thought about taking the stairs—about 1,500 of them—back to my hotel, but descending the dark, uneven stairs without a headlamp seemed like a surefire way to test out my health insurance, so I walked to the bus stop instead and caught the last bus of the evening.
Watching the sun set from the Path of the Gods.
On to Munich
The next morning I packed, had a few final cappuccinos, said goodbye to the staff and then walked up to the rooftop of the hotel (street level) to wait for my ride. Stepping out the door, I heard a hearty “Bonjourno Joe!” and looked up to see Fredo. About halfway through the ride to the airport he asked me if I had time to stop for an espresso. He took me to his local coffee shop and ordered two espressos made with Kimbo, the local brew. We stood at the bar (there were no seats in the small café) and were each handed a small cup of orange flavored sparkling water to cleanse our palates. The perfectly pulled espresso shots came 30 seconds later. We clinked glasses, downed the contents in one shot and it was on to Munich.
I mentioned that the book I brought on this trip was Meditations by Marcus Aurelius, ruler of the Roman Empire from 161 to 180 AD. To the extent that I read books on philosophy, I tend to enjoy those that give practical insights into how we should live. As a Christian, I read the Bible on a regular basis for that type of instruction, but I also enjoy reading the occasional Stoic, such as Seneca, Epictetus and the aforementioned Marcus. (Note: I’m not equating Christianity and Stoicism. There are certainly differences between the two (e.g. religion vs. philosophy), but some similarities as well. In particular, their emphasis on things like wisdom, kindness, humility, stewardship, contentment and self-control).
As I was reading at breakfast this morning, this passage from Meditations caught my eye:
“Suppose that a god announced that you were going to die tomorrow or the day after. Unless you were a complete coward you wouldn’t kick up a fuss about which day it was—what difference could it make? Now recognize that the difference between years from now and tomorrow is just as small.”
That is so true. How many times have you looked back on a year or two or ten and thought about how quickly they passed?
If I told you that you were going to die 30 days from now, you would likely use those days very intentionally, spending time with those you love, mending relationships, maybe even doing a few of the undone things on your bucket list. I think the point Marcus is trying to make is that if I told you that you were going to die 30 years from now, it should produce the same response. The difference between 30 days and 30 years is minimal. They will both go by in the blink of an eye. So be very intentional with each day. Don’t procrastinate or put things off until “Someday.” Don’t use “retirement” as an excuse for life avoidance or as a synonym for when you actually plan to start living. The clock is ticking and, even if you have decades left, you barely have any time at all. Be intentional and make the most of it.
Where is Joe?
Good question! I’m starting to get a little confused myself. Apologies for being behind on my writing. I mentioned in my last post that I was in Italy. I flew from Paris to Naples and then from there spent several days in a little seaside town called Positano. From there I went to Munich, Germany where I connected with a few friends, explored the huge open-air market, and took several tours, including a beer and food tour of the city’s many breweries. I’ll write more about all that soon, but for now, I’m in London and I’ve got a flight to catch as I keep pushing west. I hope you’re doing well, wherever you are today.
France is a few days in my rear-view mirror, but I still wanted to share a few quick stories about my time there. I flew from Hong Kong to London to Paris (HKG to LHR to CDG in airport parlance), picked up a rental car and drove a few hours to the charming town of Bayeux in the Normandy region of France. I rented a little flat on a quiet back street and used that as a jumping off point for several days of adventure.
Just walking around the town was an experience. I’m always awed by how old everything is in Europe. The origins of the town of Bayeux can be traced back to a Gallo-Roman settlement in the first century BC. It has survived a number of invaders over the years, from the Viking raids in the 9th century to Hitler in the 20th. I was fascinated by the cathedral, which is 1,000 years old, and the central role it played in William the Conqueror’s invasion of England (Visit our Facebook page for a bit more on that story and to see a short video I took of the bells ringing one night as I walked back to my flat).
I chose Bayeux, because I wanted to tour the World War II sites around Normandy. My wife and I were in Paris several years ago and my one regret from that trip was that we didn’t have time for a Normandy day trip, so I wanted to right that wrong.
To make the most of my time, I hired an experienced guide named Colin McGarry. He’s originally from England, but met and married a French girl years ago and has been guiding around Normandy since the 1980’s. He met me at me flat the morning after my arrival and we drove first to Omaha Beach. He spent time talking about the big themes of the invasion (e.g. strategy, logistics, etc.), but also took a deep dive into many personal stories and recollections of both Americans and their German counterparts on that day of days. I’ve read several books on World War II and watched a number of films like Band of Brothers and Saving Private Ryan, but nothing can quite bring that history alive like walking the beach where so many struggled ashore or running your hand over the broken concrete and twisted rebar of a German machine gun nest.
From the beach, we took the short drive up to the American Cemetery and spent time discussing how it came to be, the soldiers that are still missing and the upcoming 75th anniversary next year. We also walked to dozens of specific graves where Colin told me stories of heroism and heartbreak from D-Day as seen through that particular soldier’s eyes. Throughout the rest of the day, we visited a number of other sites around the area including Utah Beach, Pointe du Hoc, St. Mere Eglise, Brecourt Manor, St. Mere du Mont and Carentan. The entire day was both fascinating and, as you might imagine, very moving. If you enjoy history, I’d encourage you to add Normandy to your to-do list and if you want to do it with a guide, hire Colin. He was wonderful. Touch base with me and I’ll send you his contact info or you can Google his name and track him down on the internet.
The next day I drove a few hours south and west of Bayeux to Mont Saint-Michel. It is a small island, a few hundred meters off shore, that has a population of about 50 and is home to a famous monastery built in the 8th century. Because it is relatively close to shore, the island is completely surrounded by water during high tide, but is accessible to visitors when the tide is out. I paid a few Euro for an audio guide and spent time walking from building to building and room to room around the 17-acre site, learning about the hundreds of years of history that preceded my visit. I finished around noon and was starting to get hungry, so I stopped into a small restaurant for lunch and ordered a meal that the island has become famous for: a very fluffy omelet. When it first arrives, you think you will have a hard time eating it all, but when your fork slices through it, you realize it has an omelet texture on the outside and an airy fluff of egg bubbles on the inside. The best way I can describe it is to imagine the head of foam on a beer. That is the texture of the inside of the omelet.
An unexpected surprise
Hunger satisfied, I returned to my car and punched in the coordinates for a little town called Villedieu-les Poêlles. Before leaving home, I read an article about a famous cookware company in the town called Mauviel 1830. My wife loves to cook, so I thought I’d swing by the town, tour the copper workshops and see if I could find her a gift that she would enjoy and, perhaps more importantly, would fit in my backpack. When I got to the town, I stopped by the tourism office for directions and learned that Mauviel was not the only artisan factory in the town. In fact, the town was loaded with craftsmen (and women) who, along with their predecessors, had been practicing their trades there since the middle ages.
One in particular that sounded fascinating to me was a bell foundry that is the source of the bells for many of the famous cathedrals in France and around the world. A tour was 8 euros, which ended up being the bargain of the trip. Touring the foundry and learning about the process (little changed for hundreds of years) that goes into making a bell was fascinating. When hired to produce a bell, the craftsman chalks the weight of the bell and the name of the church onto the wooden beam above his station. Then, using a mixture of clay, horse manure and goat hair, he crafts an interior and exterior mold for the bell that, when fitted together, leave a cavity inside where the molten brass is poured. That all sounds difficult enough, until you learn of the complex math involved in calculating the appropriate shape and thickness of the bell so that it will ring the desired note (requested by the church) in perfect pitch over its 250-year life. Today, the calculations are performed by computer. For the hundreds of years prior, the craftsmen had only their brain power, pencil and paper to do the math. Again, it was all really fascinating. Visit our Facebook page for pictures.
After the tour, the day was growing short and I still had a 4-hour drive back to Paris, so I hit the road. I made it to the airport around 10 pm, dropped off the rental car and took a taxi to my hotel. After a few hours sleep, it was back to the airport for an early morning flight to Italy and the next leg of the trip. More on that soon. Thanks for following along.
What are you afraid of? Be honest. We all have stuff that scares us. Maybe it’s something big. Maybe small. Regardless of what it is, the outcome is often the same: Stasis. Fear acts as a roadblock that keeps us from doing something. Fear is often the great preserver of the status quo. It keeps you from having that uncomfortable conversation with your spouse or friend. It keeps you from going to the doctor. Or asking for a raise. Or joining the gym. Or dealing with an addiction. Or moving to a new town. Or changing jobs. Or starting a business. Or making new friends. Or traveling. These fears, big and small, stop us in our tracks and the longer we allow them to persist, the more insurmountable they seem.
But here’s the thing. Almost every fear that you and I have—those things that have been holding us back for years and that are keeping us from the things that we genuinely want from life—can be overcome with a few seconds of uncomfortable action. It reminds me of that quote from Matt Damon’s character in the movie We Bought a Zoo:
“Sometimes all you need is 20 seconds of insane courage. Just literally 20 seconds of embarrassing bravery and I promise you something great will come of it.”
This is true because fear isn’t something that persists for very long in the face of action. Once you start, the fear subsides and you focus on the action at hand. In that sense, inaction is much more uncomfortable than action because the fear and anxiety of inaction is a long-term state. We marinate in it, sometimes for years. Once you start, however, and push through the fear with a short burst of bravery, the fear subsides and your focus shifts to whatever it is that you’re doing.
I’m writing about this idea because I’ve had constant reminders about it on this trip. When traveling, especially internationally, there are dozens of little fears that crop up. Not being able to speak the language. Driving a rental car in a strange city. Figuring out the subway. Those things can make you want to curl up in a ball in your hotel room and cry. Fortunately, inaction isn’t really a choice. Scared of driving? Too bad. You’ve got 100 cars behind you. Subway make you nervous? Unless you want to sleep at the airport, you’d better take a stab at it. So you do. And…hey…what do you know! You figure it out. Maybe you didn’t do it perfectly, but you survived. You learned something and built a bit of confidence that you can keep in your back pocket for the next challenge. More importantly, fear vanquished, you get to do the thing that you’ve been wanting to do. String a bunch of those together and you have a life that is rewarding and untarnished by regret.
So I’ll ask again: What are you afraid of? Whatever it is, you have a choice. You can let it fester and keep you from the life you want or you can muster 20 seconds of bravery and take the first step toward resolution. Choose the former and you’ll likely be miserable. Choose the latter and you’ll wonder why you didn’t do it sooner. Good things are just on the other side of an impermanent barrier that can be breached with a few seconds of bravery. What are you waiting for?
“Do not be too timid and squeamish about your actions. All life is an experiment. The more experiments you make the better. What if they are a little coarse and you may get your coat soiled or torn? What if you do fail, and get fairly rolled in the dirt once or twice? Up again, you shall never be so afraid of a tumble.” ― Ralph Waldo Emerson
I wrapped up my time in France yesterday and hopped an early morning flight to Naples, Italy. From there I came to a little seaside town on the Amalfi Coast called Positano. I’ve got four days here with a few concentrated on work and a few for activities (e.g. visiting Pompei and Vesuvius, hiking the Sentiero degli Dei (Path of the Gods), etc.). I’ll get a post up soon filling you in on my time in France. Thanks for following along!