If you are charitably inclined and have an IRA, a Qualified Charitable Distribution (QCD) can be a great strategy. With a QCD, you can move IRA funds to the charity of your choice tax-free. Here are 12 QCD rules you must know.
1. QCDs are only available to IRA owners or beneficiaries who are age 70½ or older.
2. The maximum QCD amount is capped at $105,000 per person, per year.
3. Under the SECURE 2.0 Act, a one-time QCD of $53,000 (for 2024) can go to a split-interest entity, such as a charitable remainder annuity trust, charitable remainder unitrust or a charitable gift annuity.
4. Donor-advised funds do not qualify for QCDs.
5. A QCD can satisfy your required minimum distribution.
6. No double dipping is allowed! You cannot do a QCD and also take a deduction for the charitable contribution.
7. If you are married, you and your spouse can each contribute up to $105,000 from your own IRAs.
8. The contribution to the charity would have had to be entirely deductible if it were not made from an IRA. You cannot receive a benefit back.
9. The distribution from the IRA to a charity can satisfy an outstanding pledge to the charity without causing a prohibited transaction.
10. The charitable substantiation requirements apply. The charity will send you a written statement/receipt called a “contemporaneous written acknowledgment.”
11. QCDs can be done only with the taxable amounts in your IRAs.
12. QCDs cannot be done from SEP or SIMPLE IRAs that are actively receiving contributions.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
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