Qualified Charitable Distribution

Are you familiar with Qualified Charitable Distributions (QCD)? A QCD might reduce the taxes you owe while helping your church. Here’s how it works:

If you have an Individual Retirement Account (IRA) and are over 70 1/2, you are required to take a distribution from that IRA each year based on the value at the end of the previous year and your age. This is called a Required Minimum Distribution (RMD) and generally the distribution is fully taxed as ordinary income. The form of the distribution may be in cash or securities.

A QCD is a direct transfer of funds from your IRA custodian to a qualified charity. This direct transfer can be in cash or securities and it counts toward satisfying your RMD for the year. A QCD reduces your taxable income by the amount of such distribution since it is not included in your income.

Charitable giving is not about taxes. However, the tax benefit from a QCD encourages charitable giving and could enable you to give more money to what you love. With the recent increase in the Standard Deduction, many tax payers will find that charitable donations no longer have any tax benefit. A QCD can restore some significant tax benefits for charitable donations.

If you have questions about a QCD, please let us know.