QCD Basics

It’s that time of year again…we’re quickly approaching the December 31st deadline for RMDs from qualified retirement plans.

If you are an IRA owner, the IRS requires that you withdraw a minimum amount (RMD) from your IRA each year after your required beginning date. However, some IRA owners may not need the money or don’t want an RMD to push them into a higher tax bracket.

A QCD is a Qualified Charitable Distribution. As of December 18, 2015, Qualified Charitable Distributions (QCDs) were made permanent allowing certain IRA owners to do tax-free transfers to a qualified charity.

Under IRS rules, a QCD counts toward your RMD, meaning individual IRA owners over the age of 70½ may exclude from gross income up to $100,000 that is paid directly from their IRA (excluding SEP or SIMPLE IRAs) to a qualified charity.

An IRA beneficiary who is over age 70½ when the distribution is made may also take advantage of a QCD option!

Source: www.irs.gov; IRS Publication 590-B; IRS Notice 2007-05, Q&A 37


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