Qualified Charitable Distributions (QCDs) are a convenient and tax-free way for donors 70 ½ or older to make gifts directly from an IRA to charitable organizations like the Kalamazoo Bicycle Club, a 501(c)(3) entity.
As noted on this IRS web page that describes QCDs, Individual Retirement Account (IRA) owners aged 70½ or over have the option to transfer up to $100,000 from an IRA to charities tax-free each year. This transfer, known as a Qualified Charitable Distribution (QCD) offers eligible older Americans a great way to provide financial support to charitable organizations. Moreover, for those who are at least 73, QCDs can be counted toward the IRA owner’s required minimum distribution (RMD) for that year. If you consider making a QCD to the Kalamazoo Bicycle Club (KBC), please note the following features of a QCD:
- Charitable contributions from an IRA must go directly to an organization like the KBC.
- These QCDs can be made only from traditional IRAs or Roth IRAs and must be made directly by your IRA trustee and payable to the KBC (or another non-profit) before December 31 to qualify for that tax year. So…plan ahead.
- You must get a written acknowledgment from the KBC (or other charity) for each QCD before filing your tax return. In general, the acknowledgement must state the date and amount of the QCD and indicate whether the donor received anything of value in return.
- As noted above, a QCD can count toward your required minimum distribution (RMD) for the current tax year and may help reduce your Adjusted Gross Income.
- And, as noted by other organizations, the KBC recommends that you seek advice from your financial advisor or tax professional before deciding to make a QCD. Personal circumstances, including type of IRA, can significantly impact whether distributions like these are advantageous to you.
- Please refer to the IRS’s QCD page, noted above, for details about reporting your QCD on your IRS Form 1040.
Though many financial advisors can provide helpful advice about QCDs and IRAs, this information about QCDs from Fidelity Investments seems particularly straight-forward.
Click here for a sample letter for requesting a QCD from your IRA to the Kalamazoo Bicycle Club. Please feel free to revise it as needed. And, your IRA trustee, or the custodian for whom they work, may have an account-specific form to facilitate the fund transfer, so be sure to work with that person when carrying out this transaction.