Qualified Charitable Distributions (QCD)

Owners of Individual Retirement Accounts (IRA). who are age 70 1/2, must plan to take Required Minimum Distributions (RMD) annually. The RMD is calculated using an age based factor and the balance of the IRA as of the prior year-end. The RMD for the first few years amounts to less than 4% of the IRA balance. After age 80, the RMD amounts to over 5% of the IRA balance. The RMD’s are taxable income on your federal income tax return and on many state income tax returns.

To miniinize the income tax effect of an RMD, you might consider making a QCD to a favorite charity. Up to $100,000 can be gifted in a year as a QCD where the amount is excluded from gross income. Since you will not be reporting income with the QCD, you also will not be taking a charitable deduction. For those using the standard deduction,  it reduces taxable income.

To complete a QCD from an IRA to a charity, the IRA owner must

  • Be age 70 1/2 on the date of distribution;
  • Submit a distribution form to the IRA custodian requesting that the check be made payable directly to the charity;
  • Ensure that no tax withholding is being taken from the QCD; and
  • Send the check directly to the charity or to the IRA owner to be forwarded to the charity.

The process of completing the QCD to a charity is fairly straightforward. The key requirement is that the QCD check must be made payable directly to the charity.

Both the 25th Infantry Division Association and the 25th Infantry Division Memorial Fund can accept your gifts of a QCD. If you have general questions, please contact verne@seehausencpa.com

Are you over 70? Do you know you have to take a minimum withdrawal from your IRA? Known as the Required Minimum Distribution (RMD), you must make a minimum withdrawal each year after age 70 1/2. Congress has made permanent the opportunity to make a charitable gift from an IRA plan. You can make a direct transfer up to $100,000 annually to a public charity – tax free! Your Qualified Charitable Distribution (QCD) generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your taxes. The QCD must transfer directly from your IRA Account to an IRS qualified charity such as the 25th Infantry Division Association or to the 25th Infantry Division Memorial Fund, PO Box 7, Flourtown, PA 19031-0007.

Required Minimum Distribution (RMD)
RMD Calculations based on Year End IRA Values

*Calculations do not account for annual returns/distributions,
that would change IRA values!

Age

$100,000

$500,000

$1,000,000

70

$3,649

$18,248

$36,496

71

$3,773

$17,867

$37,735

72

$3,906

$19,531

$39,062

73

$4,048

$20,242

$40,485

74

$4,201

$21,008

$42,016

Consult your advisor or financial institution holding your IRA account!
Verne Seehausen, Treasurer