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Qualified Charitable Distribution - What You Need to Know

  • The qualified charitable distribution (QCD) must be sent from the financial institution that has held the IRA directly to the charity. If the check or wire transfer goes to the donor, it does not count.
  • Any qualified charitable organization counts, with the exception of donor-advised funds, supporting organizations, private foundations or split-interest charitable trusts.
  • The distribution will not be included in the taxpayer’s income, and it is not deductible on the taxpayer’s income tax return.
  • The QCD will count toward the IRA owner’s required minimum distribution from his or her IRA or, alternatively, the donor can have up to $100,000 of the RMD transferred to charity.
  • The distribution is limited to $100,000 per year; husband and wife are treated separately.
  • Owners of inherited IRAs also qualify if they are over 70½.
  • IRA distributions add to a taxpayer’s gross income.
  • Higher income for retirees can disadvantage them in several ways, from causing higher taxation of social security benefits to reducing the deductibility of Schedule A deductions. Therefore, giving to charity can avoid those problems.
  • For retirees who cannot itemize, this law indirectly allows them to make a charitable deduction.
  • To the extent that an IRA owner makes charitable deductions, and so long as it is administratively feasible, charitable contributions should come from the IRA.
  • No gifts may be exchanged in return for donating the IRA distribution. That would invalidate the donation.
  • The donor will be allowed to take the standard deduction and also the charitable deduction.

Calculate Your Required Minimum Distribution 

Easily compute your Required Minimum Distributions from a traditional IRA, which starts when you hit age 70½. To use the calculator, input your age at the end of 2019 and the total balance of your traditional IRA accounts as of Dec. 31, 2018. Balances from Roth IRAs should not be included, as they do not have a required minimum distribution.

Contact Annie Schwarz, Vice President, Advancement, at 216.231.5071 or aschwarz@themusicsettlement.org for more information.

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