QCDs: Clearing Up Confusion
If you are aged 70 ½ or older, it is well worth your time to investigate whether a QCD might be right for you. Actually, if you are not yet 70 ½ but know people who are, it is well worth your time to mention the tool to them! You will be doing them a great service.
Unfortunately, we hear from many donors and fund holders that they don’t understand how the QCD works. We totally get it. The QCD is a product of the Internal Revenue Code, after all, which does not always have the reputation for clarity. For starters, the name itself–Qualified Charitable Distribution–is long and not user-friendly.
If your head spins when you see the letters Q-C-D, here are two options for cutting through the complexity.
Your first and best option is to call us! The team at the Community Foundation is here to help. We talk with people like you about charitable giving techniques–including QCDs–literally all day long. We love this stuff. Reach out, and we will explain the QCD and help you figure out whether it could be useful to you or useful to a 70 ½-aged friend or relative.
If you are a DIY-type or love learning about tax techniques, here are a few quick bullets to help get your head around it:
- You can make a QCD if you have reached the age of 70½, and as such you can direct up to $100,000 annually from your IRA to a qualified charity (which includes, for example, a designated, unrestricted, or field-of-interest fund at the community foundation).
- If you’ve reached the age-73 threshold for IRS-mandated Required Minimum Distributions (RMDs) from qualified retirement plans, a QCD counts toward your RMD.
- QCD transfers are not included in your taxable income.
- QCDs are even more popular now that the $100,000 cap will be indexed for inflation under the new laws. Also, under the new laws, a one-time, $50,000 distribution to a charitable remainder trust or charitable gift annuity is now permitted.
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