IRA Qualified Charitable Distribution

A tax-wise giving opporunity for IRA owners

Donors 70 ½ or older can make a tax-wise gift directly from your IRA to a qualified charitable organization. This gift opportunity is known as the Qualified Charitable Distribution, and it can have a real impact here at Westchester Parks Foundation.

This opportunity is appealing to many because the IRA distribution does not come to you the taxpayer, so it avoids unnecessarily increasing your taxable income. In addition, the charitable distribution may qualify as part or all of your annual Required Minimum Distribution, which is the annual withdrawal that you are required to take when you reach a specific age.

The Basics

• Eligibility: Donors who are eligible must be age 70 ½ or older on the date of the gift.
• Required Minimum Distributions (RMDs): For individuals aged 73 or older, Qualified Charitable Distributions can count toward satisfying their RMD for the year.
• Tax Benefits: Qualified Charitable Distributions allow individuals to transfer up to $108,000 annually (or $216,000 for married couples if both qualify) directly from their IRA to a qualified charity without the distribution being included in taxable income.
• Direct Transfer: Distributions must be made (1) directly from the IRA trustee and (2) directly to the qualified charity.
• Reporting: Qualified Charitable Distributions must be reported on the federal income tax return. The total distribution is shown on Form 1099-R, and specific instructions apply for reporting the QCD portion.

Benefits

• You pay no income taxes on this gift. Since this charitable distribution generates neither taxable income nor a tax deduction, you benefit even if you do not itemize your deductions.
• By lowering your reported annual income, you may find that this helps lower Medicare premiums and may decrease Social Security that is subject to tax.
• The Qualified Charitable Distribution qualifies toward the owner's Required Minimum Distribution.

Additional Information

• Is there a charitable tax deduction? There is not. The Qualified Charitable Distribution allows the IRA owner to avoid paying income taxes that were deferred when the funds were initially deposited into the IRA. Normally, withdrawals from IRAs are subject to income tax. However, Qualified Charitable Distributions from IRA accounts are not considered taxable income to the donor; therefore, these gifts do not qualify as tax deductions.
• Gifts can NOT be made from 401(k) or 403(b) or other employer-sponsored retirement accounts. However, it may be possible to complete a tax-free transfer from these employer-sponsored retirement accounts into an IRA from which a charitable distribution may be made.

Video Guide to IRA Qualified Charitable Distributions

Contact Us

Erin Cordiner
Director of Philanthropy and Community Engagement
tel: 914-231-4600
erin@thewpf.org