The Qualified Charitable Distribution (QCD) was introduced by Congress (on a temporary basis) in 2006 for IRA holders. In a QCD, an individual over age 70½ can fund gifts to charities such as Tek4Kids from his or her IRA. Specifically, an individual can make one or more “qualified charitable distributions” from his or her IRA, up to an aggregate of $100,000 during the year, directly to certain charities of his or her choice. To qualify, the distribution was required to be paid directly from the IRA to the qualified charity. The QCD became permanent in 2015.
Distributions that qualify as a QCD receive very favorable tax treatment: they are not included in the individual’s gross income, but nonetheless count toward the required minimum distribution that the IRA owner must take each year after reaching age 70½ (or a beneficiary must take after the death of the IRA owner). The distribution to charity does not reduce the amount the donor can otherwise give to charity on a fully deductible basis. In other words, the amount donated through the QCD will not “count” as charitable donation when calculating the donor’s charitable gifts for the year. Thus, while the donor does not have income from the distribution, the donor does not receive a charitable deduction either.
If you are interested in donating to Tek4Kids through a Qualified Charitable Distribution, please consult your financial advisor or contact us for further information. To view a .pdf file with more details, click here: 2019-10-15 IRA Qualified Charitable Distribution