July 8, 2020

Quick Answer #1 – What is a Qualified Charitable Distribution?

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qa-1-image newQuick Answer

A Qualified Charitable Distribution (QCD) allows individuals to donate to charity through a distribution from an IRA account. The amount donated counts towards your required minimum distribution (RMD) for the year, and no income taxes are due on the distribution.

General Rules

  • Only individuals are allowed to use a QCD.
  • Per person limit of $100,000 per tax year.
  • The IRA owner must already be at least 70 ½ years old at the time the QCD is made.
  • The charity receiving the donation must provide a written acknowledgement of the donation.
  • The check has to be made out directly to the charity by your IRA custodian.
  • The QCD must be donated to an eligible public charity (private foundations, donor-advised funds, and supporting organizations are not eligible).
  • Distributions from a SEP or SIMPLE IRA (if still active and receiving ongoing employer contributions), or other employer qualified plans are not eligible.

Benefits

  • The QCD can be used to satisfy part or all of your RMD for the year.
  • The QCD is not taxed (up to the limit specified).
  • The QCD allows you to give to charity tax-free even if you do not itemize your deductions.
  • The QCD is not included in Adjusted Gross Income (AGI). This can be beneficial because many other things are based off AGI like the amount of Social Security benefits that are taxed.

Where to Find Additional Information

 

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