A Qualified Charitable Distribution (QCD) from your Individualized Retirement Account (IRA) is a great way to support the SNDdeN and enjoy tax advantages.
A QCD is a direct transfer of funds from your IRA custodian, payable to a qualified 501(c)(3) charitable organization, such as the Sisters of Notre Dame de Namur. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year. In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, unlike regular withdrawals from an IRA. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.
Also, now QCDs don't require that you itemize, which means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving.
Requirements to Make a Qualified Charitable Deduction
While many IRAs are eligible for QCDs—Traditional, Rollover, Inherited, Simplified Employee Pension (SEP) (inactive plans only), and SIMPLE (inactive plans only), there are requirements:
- You must be 70½ or older to be eligible to make a QCD.
- QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
- The maximum annual amount that can qualify for a QCD is $100,000. This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.)
- For a QCD to count towards your current year's RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
- Contributing to an IRA may result in a reduction of the QCD amount you can deduct. (The aggregate amount of deductible IRA contributions you make to your IRA after you turn 70 1/2 will reduce the amount of the QCD that is not includible in your gross income.)
For more information, please contact your financial advisor or Virginia Richardson at Virginia.Richardson@sndden.org or (650) 486-2168.
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