Are you retired and over age 70½? With recent changes in U.S. tax law, you and many other retirees may no longer be able to itemize your IRS deductions. But you can still get a tax break by making donations from a traditional IRA to a qualified charity via what is called a Qualified Charitable Distribution (QCD).
If done correctly, a QCD lets you transfer money from your traditional IRA directly to a charity without adding the amount to your adjusted gross income. And there’s a bonus: The money can count toward your annual required minimum distribution (RMD) if the QCD is made before satisfying your RMD for the year. Several members of our Synod have already used the QCD arrangement as a tax-efficient method to contribute to congregations, the Synod, the ELCA, and many other charities.
You should contact your IRA custodian before making a QCD, to make sure that you follow all of the rules for making these contributions. Some of the rules are: (1) The maximum contribution is $100,000; (2) The recipient charity must be a 501(c)(3) charitable organization; and (3) The QCD cannot be distributed to you first and then donated; instead, the money must be transferred directly from the custodian to the charity.
Disclaimer: This article is not intended to provide financial or tax advice. There may be unique limitations so please contact your IRA custodian before making a QCD. You also may want to confirm your QCD status and withdrawals with your tax professional.