Tax Planning: Qualified Charitable Distributions (QCDs)

When planning your IRA withdrawal strategy, you may want to consider making charitable donations through a Qualified Charitable Distributions (QCD). This is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted towards satisfying your required minimal distributions (RMDs) for the year, if certain rules are met.

In addition to the benefits of giving to a charity, QCDs excludes the amount donated from your taxable income, which is 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, QCDs do not require that you itemize, which due to the recent tax law changes, means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving.

Can I make a QCD? Check with your tax advisor first, but here are some of the rules:

  • You must be 70 ½ or older to be eligible
  • QCDs are limited to the amount that would otherwise be taxed as ordinary income (you’re not able to take more than your required minimum distribution)
  • That maximum annual amount that can qualify is $100,000
  • The funds must be a “direct transfer” from your IRA to the charity.

What kind of charities qualify?

The charity must be a 501(c) (3) organization….. like Brighton Center!

For more information, please contact your tax advisor or Becky Timberlake at