There are many different ways you can donate to your favorite charity (Like CTC!) this holiday season! One way is by making a Qualified Charitable Distribution (QCD).
A Qualified Charitable Distribution (QCD) is a reportable distribution of funds from your IRA that are payed directly to a qualified charity. Your QCDs may be used to meet your required minimum distributions (RMDs) for the year (as long as certain rules are met.)
What are the requirements?
- You must be 70.5 or older
- The maximum annual amount that can qualify is $100,000
- Married individuals filing a joint return may donate up to $100,00 from each spouse’s own IRA ($200,000 total).
- To count towards your current year’s RMD, funds must be distributed from your IRA by December 31.
What type or IRA accounts are eligible for a QCD?
- Traditional IRA
- Inherited IRA
- Roth IRA
- SEP IRA (inactive plans only)
- SIMPLE IRA (inactive plans only)
What type of charities qualify for a QCD?
A charity must be a registered 501(c) (3) organization in order to qualify to receive tax-deductible contributions.
Some charities that do not qualify for QCDs are:
- Private foundations.
- Supporting organizations (i.e. charities carrying out exempt purposes by supporting other exempt organizations, usually other public charities).
- Donor-advised funds which public charities manage on behalf of organizations, families, or individuals.
Where can I find more information on QCDs?
For more information on QCDs, visit IRS.gov, or consult a professional tax advisor.
The information in this blog is not meant to be tax advice, and anyone considering a QCD should consult their tax advisor. A professional tax advisor will be able to ensure your IRA and the charity you choose are eligible, and all other QCD requirements and documentation are met.