If you are 73 or older, still need to take your required minimum distributions from your IRA for this year, and want to contribute to a charitable cause, consider taking your RMD as a qualified charitable distribution (QCD). A QCD withdrawal made directly to a charitable organization will count toward your required minimum distribution and save on taxes because it does not count as income for the year.
Quick Facts About Qualified Charitable Distributions
- May only be made from your IRA.
- You must be 73 to take a mandatory distribution from your IRA.
- You may request that your IRA trustee send the funds directly to the charitable organization. In the alternative, have the trustee send a check to you made payable to the charity, which you will then send on to the organization.
- You may not claim the QCD as a charitable deduction on your income tax.
- You do not have to declare the funds as income.
- In 2024, the cap for a QCD is $105,000. If you are married and file jointly, your spouse may also contribute that much, for $210,000 in total. However, each of your QCD’s may not exceed $105,000.
- You may not take any services, goods, or thank you gifts from the organization to which you are donating.
- You may not take a QCD from your 401k, unless you first roll over the 401K into an IRA.
Hurry if you want to make a QCD this year! The check must clear by the end of the year to count toward this year’s RMD.
Check The Charity’s Status & Effectiveness
Not every organization that appears to be a charity, is. For your RMD to count as a Qualified Charitable Donation, the organization must be a tax-exempt organization, i.e., have 501(c) 3 status under IRS rules. You should make sure the charity you are considering donating to is tax-exempt. Do this by asking the charity to give you its EIN number, or go to the organization’s website to check for this information. You can also also look up non-profit status through Guidestar.
There are several online resources that provide information about your intended charity’s financial status, how effectively it uses donations, who sits on the board, and other information. Here are some resources:
For more detailed guidance, talk to your financial advisor. If you need a financial advisor, call our office at 561-625-1100 or email us and we will provide you with names of several advisors we know and trust.
