Qualified Charitable Distribution FAQ
Please consult your tax advisor regarding your particular tax situation, and consult a lawyer to discuss any legal advice.
What is a QCD?
A qualified charitable distribution (QCD) is an amount of money moved from an individual retirement account (IRA) or other qualified retirement plan directly to a charitable organization. A QCD allows people 70 ½ or older to donate up to $100,000 to charity directly from an IRA instead of taking the required minimum distribution (RMD). A QCD allows the entire amount to go directly to charity without being subject to tax.
What is the difference between a QCD and an RMD?
Everyone must start taking required minimum distributions (RMDs) from their qualified retirement plans, including IRAs, when they reach the age of 72. RMDs are taxable income. A QCD, by contrast, is a distribution directly from certain types of qualified retirement plans (such as IRAs) to certain types of charities. When a taxpayer follows the rules, a QCD can count toward the taxpayer’s RMD for that year. And because the QCD goes directly to charity, the taxpayer is not taxed on that distribution.
Can I make a QCD even if I am not yet required to take a RMD?
Yes – within a very narrow age window. QCDs can be made beginning at age 70 ½. RMDs do not start until age 72. The IRS’s rules for QCDs are captured in Internal Revenue Code Section 408 and summarized on pages 14 and 15 in Publication 590-B in its FAQs publication.
Can I direct a QCD to my charitable fund at the DCF?
Yes, if it’s a qualifying fund. While donor advised funds are not eligible recipients of QCD, other types of funds at the community foundation can receive QCDs. QCDs can go to designated funds, unrestricted funds, field-of-interest funds, and scholarship funds. If a QCD is made to a donor advised fund, the DCF will provide a letter indicating a gift was made and is deductible as a charitable contribution to the extent allowed under IRS regulations, but the distribution may still be counted as taxable income.
How much can I give through a QCD?
A QCD permits you (and your spouse from your spouse’s own IRA or IRAs) to transfer up to $100,000 each year from an IRA (or multiple IRAs) to a qualified charity. So, if you are a married couple, you and your spouse may be eligible to direct up to a total of $200,000 per year to charity from your IRAs and avoid significant income tax liability.