TAX-FREE DISTRIBUTIONS from IRA/QCD

If you have an IRA, then you probably know that beginning at the age of  70 ½, you must take your Required Minimum Distribution (RMD), of which you are taxed, every year even if you do not need or want the money. Before taking your RMD on your IRA, explore if a Qualified Charitable Distribution (QCD) is right for you.  A QCD allows you to make a charitable gift directly from your IRA, and the amount of the gift will not be included in your taxable RMD.

∼ If you are 70 1/2 or older, you can use your individual retirement account (IRA) to support children in need.
∼ Avoid taxes on transfers of up to $108,000 from your IRA to support Hibiscus Children’s Center.
∼ Satisfy some or all of your required minimum distribution for the year.
∼ Reduce your taxable income, even if you do not itemize deductions.
∼ Make a gift that is not subject to the deduction limits on charitable gifts.
∼ Use your rollover to make payments on an existing pledge to us.
∼ Donor may not receive any benefit for the gift, i.e. no event sponsorships, ticket purchases, etc. can qualify.

Benefits of a QCD

One of the largest benefits of a QCD is fulfilling all or part of your RMD while avoiding paying taxes on the gifted amount of the RMD. Due to the decreased balance of your IRA, it may minimize future required withdrawals. To avoid being taxed, the gift must be made directly from your IRA.  You may donate up to $108,000 to a charity per year in QCDs, as long as that individual is 70½ years old or older. For married couples, each spouse can make QCDs up to the $108,000 limit for a potential total of $216,000.

If you are taking distributions on your IRA that you don’t need or want, consider making a charitable gift through a QCD.  Here is a sample letter you can adjust for your administrator.  Sample Letter to IRA Administrator