IRA Required Minimum Distribution

How You Can Contribute to the Whitebark Pine Ecosystem Foundation through your IRA Required Minimum Distribution:

Those over 70 and 1/2, and who may no longer itemize and yet have significant retirement accounts, might consider using a charitable IRA rollover—also called a qualified charitable distribution (QCD). Funds transfer directly to the charity of their choice and count toward their required minimum distribution (RMD), in effect deflecting a taxable event through a charitable gift. Donors don’t need to itemize on your tax filing to take advantage of them.

A QCD is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year, as long as certain rules are met.

In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA. This does not apply to distributions from 401K retirement accounts.

Can I make a QCD?

While many IRAs are eligible for QCDs—Traditional, Rollover, Inherited, SEP (inactive plans only), and SIMPLE (inactive plans only)* —there are requirements:

  • You must be 70½ or older to be eligible to make a QCD.
  • QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
  • The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.)
  • For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.

Any amount donated above your RMD does not count toward satisfying a future year’s RMD.

Funds distributed directly to you, the IRA owner, and which you then give to charity do not qualify as a QCD.

Under certain circumstances, a QCD may be made from a Roth IRA. Roth IRAs are not subject to RMDs during your lifetime, and distributions are generally tax-free. Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation.

What kind of charities qualify?

The charity must be a 501(c)(3) organization, eligible to receive tax-deductible contributions.

A tax advisor can help you determine if both your IRA and charity qualify for QCDs.

For more information, got to the IRS website, https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals

The general information provided here is not presented as specific financial, legal, or tax advice for any individual. Consultation with your own professional financial advisor(s) is always recommended.