QCD
What is a Qualified Charitable Distribution (QCD)?
A Qualified Charitable Distribution (QCD) is a tax-friendly way for individuals aged 70½ or older to contribute directly from their IRA to a qualified charity. QCDs allow you to lower your taxable income while supporting causes you care about, making them an effective tool for tax and philanthropic planning.
Benefits of a QCD
Tax-Free Donation: A QCD is excluded from your taxable income, unlike standard IRA withdrawals.
Satisfies RMDs: If you’re over 73 and need to meet Required Minimum Distributions (RMDs), a QCD counts toward this requirement.
No Need to Itemize: QCDs offer tax benefits without needing to itemize deductions.
Key Details to Know
Eligibility: You must be 70½ or older.
Annual Limit: Up to $105,000 (2024) can be donated annually per individual.
Direct Transfer: The distribution must be made directly from your IRA to the charity.
Qualified Charities: Ensure the organization meets IRS requirements to receive QCDs.
Important Considerations
While QCDs provide excellent tax advantages, it’s essential to coordinate with your financial advisor or tax professional to ensure your charitable giving aligns with your broader financial goals. Additionally, ensure that your chosen charity is qualified by the IRS to accept such donations to maximize the benefits.
Final Thoughts
QCDs are a strategic way to reduce your taxable income while supporting meaningful charitable work. For individuals managing their RMDs and looking to simplify their taxes, this option is worth exploring.
The subject matter in this communication is educational only and provided with the understanding that we are not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
