Great news for IRA owners 70½ or older who are charitably inclined!
Thanks to the American Taxpayer Relief Act of 2012 (ATRA), IRA owners can once again make a qualified charitable distribution (QCD) from an IRA to a qualified charity of their choice.
Here’s how it works:
If who are at least 70½ years old and would otherwise have to satisfy a required minimum distribution from an IRA, you may donate any portion of the required distribution up to $100,000 directly from your IRA to a qualified charity of your choice. Additionally, as the IRA owner, you can exclude the amount of the QCD from your gross income on your tax return. A win for you and a win for a favorite charity!
As with many IRA provisions there are a number of fine-print items to keep in mind:
- You are only eligible to make a QCD if you are 70½ or older.
- Contributions can only be made to 501(c)(3) charities and 170(b)(1)(A) organizations.
- Donor advised funds and 30% public foundations are not eligible to receive the QCDs.
- The QCD must be made directly from your IRA to the desired charity, meaning that the check issued from your IRA must be payable to the charity. If the check is made payable to you, then it counts as taxable income and will be considered a normal IRA distribution.
- The amount of the QCD excluded from the gross income is not included when determining any deductions made to qualified charitable organizations.
- The QCD can be made from any IRA. SEP and SIMPLE IRAs are only eligible if they are not receiving employer contributions in the same year as the QCD is made. You cannot make the QCD from any employer retirement plans, such as a 401(k), 457 or 403(b), etc.
- The QCD cannot be a split-interest gift, meaning that 100% of the gift must go to a single charity and the gift cannot be shared with the donor or any other designee of the donor. The donor cannot receive any economic benefit as part of the gift.
For more information, please contact Chris Clark, CISP, Investor Services Manager, firstname.lastname@example.org, 800.274.1883.