If you are 70 ½ or older and you are charitably inclined, you should be making your gifts to your favorite charities through Qualified Charitable Distributions (QCDs) from your retirement accounts.
What is a Qualified Charitable Distribution (QCD)?
A QCD is a distribution from your Individual Retirement Account (IRA) to a qualified charity.
Who qualifies to make a QCD?
You must be age 70 ½ to make a QCD.
Who benefits from a QCD?
As the donor, you benefit because the distribution from your IRA is not subject to taxation. You also reduce the size of your IRA, and, as a result, future distributions will be smaller and result in lower taxes.
The charity benefits because it receives the distribution without paying taxes.
Does the QCD satisfy the Required Minimum Distribution (RMD) from the IRA?
Yes, QCDs meet the RMD. You should take the QCD before you take your RMD. Also, remember to include the QCD on your tax return.
Is there a limit on the amount of QCDs?
In 2024 the maximum QCD is $105,000 from your IRA.
What else should I know about QCDs?
You can use $53,000 of a QCD as a one-time donation to a Charitable Remainder Trust (CRT).