Qualified Charitable Distributions

A QCD is a nontaxable direct transfer of funds from the IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying required minimum distributions (RMDs) for the year, provided certain rules are met and described below.

In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, unlike regular taxable withdrawals from an IRA. Lowering taxable income may reduce the impact to certain tax credits, taxable amounts of Social Security income benefits and deductions from your Social Security benefits.

QCDs do not require that you itemize, which due to the recent tax law changes, means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving.

Although many IRAs are eligible for QCDs, Traditional, Rollover, Inherited, SEP (inactive plans only), and SIMPLE (inactive plans only), there are requirements:

  1. You must be 70½ or older to be eligible to make a QCD. The 2017 TCJA, which increased the age for required minimum distributions to 72 did not increase the age for QCD’s.
  2. QCDs are limited to the amount that would otherwise be taxed as ordinary income. QCDs may not be used for non-taxable transfers of after-tax deposits.
  3. The maximum annual amount that can qualify for a QCD is $100,000 per taxpayer, per year. This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000 as well.)
  4. For a QCD to count towards the current year's RMD, the funds must come out of the IRA by your RMD deadline, generally December 31.

Any QCD amount donated above your annual RMD does not count toward satisfying a future year's RMD.

Funds distributed directly to the IRA owner, and which they then give to charity do not qualify as a QCD. The QCD must be a direct transfer from the IRA custodian to the qualified charity. The charity must be a 501(c)(3) organization, eligible to receive tax deductible contributions.

A QCD is reported as a normal distribution on IRS Form 1099-R for any non-Inherited

IRAs. For Inherited IRAs or Inherited Roth IRAs, the QCD will be reported as a death distribution. Itemization is not required to make a QCD. While the QCD amount is not taxed, you may not then claim the distribution as a charitable tax deduction.

When making a QCD, you must receive the same type of acknowledgement of the

donation that you would need to claim a deduction for a charitable contribution.

Before making a QCD, consult your tax advisor and/or your financial advisor.