What is a Qualified Charitable Distribution?

Anyone who reaches age 70 ½ must start taking RMDs (Required Minimum Distributions) from their retirement accounts - and they have to pay income taxes on these distributions. But for those of you who are already planning to donate to charity, it's possible to donate directly from your individual retirement account as a QCD - a Qualified Charitable Distribution. This counts as part of your required minimum distribution, but the money isn't taxed - it goes straight to charity. 

Who should do this?

Qualified charitable distributions are a great idea if you:

• are over 70 ½,
• have individual retirement accounts you must take RMDs from, and
• want to donate to charity

How can I donate with a QCD?

First, pick the charity you want to donate to. It must be a 501(c)(3) organization, not a Donor Advised Fund or a private foundation. 

1. Then, contact your IRA custodian for the distribution paperwork (if you're invested through us, we can get the paperwork for you from SSG). This is important - you can't have the money distributed to you and then donated; it has to go directly from your IRA custodian to the charity. 
2. Once you've sent in the paperwork for the donation, make sure the charity cashes the check before year-end, and ask for a receipt for your records. 

If you weren't planning to donate to charity, QCDs don't make sense financially. But if you were already going to donate, using a QCD allows you to avoid paying taxes on the donation. And that means your favorite charity gets more money! 

Any questions? Want to set up a QCD for this year? Call us, and we'll walk you through it step by step!