Giving with Qualified Charitable Distributions from Your IRA
The new tax law may impact charitable giving this year - locally and beyond. One element that is untouched is the Qualified Charitable Distribution (or QCD) from an IRA.
---> Are you 70 ½ or older?
---> Do you have an Individual Retirement Account (IRA)?
---> Do you love your community?
A charitable contribution through an IRA might be for you.
An individual who is 70 ½ or older can distribute up to $100,000 directly from their IRA account to a charitable nonprofit organization each year. A contribution to the Community Foundation is a “Qualified Charitable Distribution”, or QCD. There are multiple benefits to this kind of contribution:
- Gifts made from an IRA reduce your adjusted gross income (AGI), so they may reduce your state and federal taxes, too.
- Qualified charitable distributions count towards your required minimum distribution (RMD) from your IRA.
- A charitable contribution through your IRA allows you to make a significant gift without using cash or other assets.
There are a few other details and restrictions to consider:
- You must be 70 ½ or older when you make a contribution through your IRA.
- The gift must be from an IRA; no other retirement plans (such as 401k, 403b or SEP accounts) qualify, though your financial advisor may be able to recommend other solutions.
- Your QCD check must be issued by the IRA plan administrator directly to the Community Foundation in order to qualify.
- Your gift cannot support a donor advised fund.
- Although the distribution will be free from tax, it will not generate an income tax charitable deduction.
A charitable contribution through your IRA can be an advantageous way to give. We recommend discussing the option with a professional advisor and contacting your IRA plan administrator to learn their procedure for making a qualified charitable distribution to a charitable organization. If you would like to learn more about Where to Give, we can help!