If you are 70½ years of age of older, there is some important news that we want to share. As we head into year-end charitable giving season, you may be able to take advantage of a Qualified Charitable Distribution (QCD) in support of the Rocky Mountain MS Center.
A QCD is a direct transfer of funds from your IRA, payable to a qualified 501(c)(3) like the MS Center. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year, as long as certain rules are met.
In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA.
Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.
While many IRAs are eligible for QCDs, but there are certain requirements that must be met:
- You must be 70½ or older to be eligible to make a QCD.
- QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
- The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. (If 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.)
- For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
Any amount donated above your RMD does not count toward satisfying a future year’s RMD.
Funds distributed directly to you, the IRA owner, and which you then give to charity do not qualify as a QCD.
If you have not yet taken your required IRA deduction for 2017, this is a great option for making a year-end gi to charities. Otherwise, keep this benefit in mind as you plan for 2018. Please note: Donors who would like to give in this way will need to take care to ensure the transfer is done directly from their IRA to the charity, otherwise it will not satisfy the requirements of the law. We recommend all donors consult their financial advisor.