Qualified Charitable Distribution Information

You can make a Qualified Charitable Distribution directly from your IRA to a charity (like Spokane Public Radio) and count it towards 2013.  Qualified distributions for 2013 must be made by December 31, 2013.

Individuals must be 70 1/2 years of age or older when the contribution is made.  Contributions must come from traditional or Roth IRAs. According to the IRS, QCDs cannot be made from: employer-sponsored IRAs (Simplified Employee Pensions; SEP-IRAs), Savings Incentive Match Plans for Employees (SIMPLE-IRAs), or from defined contribution retirement plans (for example, 401(k) plans or 403(b) plans). Charities receiving the contribution must be eligible to receive tax-deductible charitable contributions; 501(c)(3) organizations.

The maximum QCD is $100,000; however, a spouse can also make a $100,000 qualified charitable distribution within the same year if the couple files a joint income tax return.  The $100,000 max limit doesn’t apply to the overall charitable deduction limit. Therefore, individuals are able to make charitable contributions in excess of 50% of their adjusted gross income.

The distribution must be a “trustee-to-trustee transfer”. This means that the money doesn’t touch your bank account; instead, it goes directly from your IRA account to the charity that you have chosen. A distribution to a recipient other than a charity will not be tax free, even if that recipient donates the money to a charity.

For those of you who have Required Minimum Distributions, QCDs satisfy RMDs that you would normally be forced to receive from your IRA, just as if you had received an actual distribution from the plan. This means your RMD will satisfy your required distribution amounts as well as give you all of the tax benefits of a qualified charitable distribution.  However, you do not get to deduct QCDs as a charitable contribution on your federal income tax return. That’s double dipping.

More information available through the IRS.
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