The qualified charitable distribution (QCD) is a special provision allowing donors to exclude from taxable income (and count toward their required minimum distribution) certain transfers of Individual Retirement Account (IRA) assets that are made directly to public charities.
Internal Revenue Service rules allow taxpayers age 70½ or older to transfer up to $100,000 annually from their IRA accounts directly to a charity, such as the Pacific Crest Trail Association, without first having to recognize the distribution as income and thereby pay federal income taxes.
If you plan to take advantage of this provision, action needs to be taken quickly as the PCTA or any nominated charity must receive the distribution by Dec. 31, 2019 in order for the donation to qualify for federal tax-free status in 2019.
Anyone considering this strategy should consult their tax or financial advisor to determine how a distribution from your IRA to the PCTA will affect you.
A gift that qualifies, technically termed a “qualified charitable distribution,” would be:
- Made by a donor age 70½ or older
- Transferred from a traditional or Roth IRA directly to a permissible public charity, such as the Pacific Crest Trail Association.
- Completed in calendar year 2019 for the 2019 tax year.
Frequently asked questions:
Who can benefit from using the qualified charitable deduction to make a gift?
- Persons making gifts that are large, relative to their income. (Because a QCD is not included in taxable income, it does not count against the usual percentage limitations on using charitable deductions.)
- Persons with significant assets in an IRA.
- Persons having so few deductions they chose not to itemize.
If you made a charitable contribution from your IRA in other tax years, can you do this again for the 2019 tax year?
- Yes. Even if you and your spouse both made the maximum $100,000 QCD gift to a qualifying charity during one or more previous years, you can still use this process again for the 2019 tax year. However, you generally cannot make more than one QCD from the same IRA within a 1-year period.
More detailed information can be found on our website.
