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Q. What charities are eligible to receive a Qualified Charitable Distribution?
A. QCD/IRA Charitable Rollover gifts must be directed to tax exempt organizations that are classified as 501(c)(3) charities, such as the Community Foundation.
Q. Are there any QCD/IRA Charitable Rollover transfers that do not qualify?
A. Yes. Transfers to supporting organizations 509(a)(3) and Donor Advised Funds do not qualify. In addition, split interest gifts, such as charitable annuities, charitable lead trusts and charitable remainder trusts, do not qualify. Further, an individual may not receive a benefit in return for an IRA distribution. However, many other funds at the Community Foundation are eligible. Please contact us to discuss options.
Q. What are the tax implications for me?
A. The transfer to the charity does not count as income for federal tax purposes and is not taxed as such, provided it goes directly from the IRA provider to the charity.
Q. Does the transfer qualify as my required minimum distribution?
A. Yes, QCD/IRA Charitable Rollover gifts do count towards the RMD for individuals who have reached age 70 ½.
Q. What is the procedure to execute a QCD/IRA Charitable Rollover?
A. Contact your IRA custodian to learn their procedures. We also offer a sample letter you can send to your IRA custodian to initiate a Qualified Charitable Distribution to the Community Foundation. Make sure that you contact us when you direct the rollover so we can track the check from your IRA custodian.
Q. Who can benefit from a QCD/IRA Charitable Rollover?
A. Qualified Charitable Distributions are an excellent option for you if any of these apply to you:
- You are already making charitable contributions and are not able to itemize anymore.
- Your income level causes the phase-out of your exemptions or itemized deductions.
- Additional income from your RMD will cause more of your Social Security income to be taxed, and/or your Medicare premiums to increase.
- You wish to remove up to $100,000 from your taxable estate.
Q. Is a donor limited to one QCD/IRA charitable distribution per year, or can multiple transfers be requested?
A. Donors aged 70 ½ or older are limited to a maximum of $100,000 per person in any one year as a QCD/IRA charitable distribution, however there is no requirement that the entire amount be made in one transfer or that the entire amount go to a single qualified charitable organization. Donors can request multiple direct transfers from their IRA to qualified charities in a year, but only $100,000 will be excluded from income as an IRA qualified charitable distribution.
Frequently Asked Questions
Sample Letter to IRA Custodian to Initiate a QCD/IRA Charitable Rollover