If you are 70 1/2 or older, planning to make gifts to charity this year, and you have an IRA you may want to consider a Qualified Charitable Distribution (QCD). To help guide you, here are a few frequently asked questions and answers on QCDs.

What is a Qualified Charitable Distribution (QCD)?
A QCD is a direct transfer of funds from your IRA, payable directly to a qualified charity, such as CFHZ. Amounts distributed as a QCD can be counted toward satisfying your RMD for the year, up to $100,000 per individual. The QCD is excluded from your taxable income.
When can I make a QCD from my IRA?
You can make a QCD beginning at age 70½ years old.
For a QCD to count toward your current year’s RMD, the funds must come out of your IRA by your RMD deadline, which is generally December 31 each year.
How much can I distribute as a QCD?
The maximum annual distribution amount that can qualify for a QCD is $100,000. This limit would apply to the sum of QCDs made to one or more charities in a calendar year. If you are a joint tax filer, both you and your spouse can make a $100,000 QCD from your own IRAs.
Can the QCD offset a RMD?
A QCD can satisfy all or part of your required minimum distribution (RMD) that starts at age 72 for traditional IRAs. The money distributed as a QCD does not count toward your adjusted gross income (AGI) as it does with a regular distribution.
Do I receive an income tax deduction with a QCD?
You do not receive a tax deduction for a QCD rather it reduces income and therefore can benefit even those donors who do not itemize.
Is my account eligible to make a QCD?
The account types that are eligible for QCDs include traditional and inherited IRAs, SEP and SIMPLE IRAs (inactive plan only). Under certain circumstances, QCDs may be made from a Roth IRA. However, Roth IRAs are not subject to RMDs during your lifetime, and distributions are generally tax-free. Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation.
Non-IRA qualified retirement plan such as an employer offered 401(k), 403(b), etc. are not eligible. However, it may be possible to transfer or rollover funds from a non-IRA qualified retirement plan to an IRA. Check with your retirement plan administrator for eligibility and guidelines. Once the new IRA is established, you may then initiate an IRA QCD.
How do I initiate a QCD?
Contact your IRA administrator to request a Qualified Charitable Distribution to be sent directly to a qualified charity. Most likely your plan administrator will have a form for you to complete.
Are there any restrictions on a QCD?
A QCD may not be made to a Donor Advised Fund, supporting organization, or private foundation. A QCD must be an outright gift and you may not receive any benefits in exchange such as tickets to an event, membership, etc. A QCD may not fund a life income gift, such as a charitable gift annuity or charitable remainder unitrust.
What type of acknowledgment should I expect to receive from my QCD?
You should receive an acknowledgment including a statement that no goods or services were received in exchange for the qualified distribution. Should you choose to direct your QCD to CFHZ we will further state in the letter that you maintain no advisory privileges on the funds gifted.
How do I report my QCD?
A QCD is reported by your IRA custodian as a normal distribution on IRS Form 1099-R for any non-inherited IRAs. To report a QCD on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter “QCD” next to this line. You should keep the acknowledgment of the donation for your tax records. Check with your tax advisor to confirm your personal tax reporting requirements.
What if I take my RMD and then gift to charity later?
If you take the RMD as income, instead of as a QCD, your RMD will count as taxable income. This additional taxable income may push you into a higher tax bracket and may also reduce your eligibility for certain tax credits and deductions. For example, your taxable income helps determine the amount of your Social Security benefits that are subject to taxes. Keeping your taxable income level lower may also help reduce your potential exposure to the Medicare surtax. If you plan to give to charity, you may wish to consider making a QCD to eliminate or reduce the impact of RMD income.
Is there any benefit to a QCD before I am required to take a minimum distribution from my IRA?
As a result of the SECURE Act of 2019, taxpayers are not subject to RMDs until they reach the age of 72, previously distributions were required to begin at age 70 ½. However, the age at which an individual may begin making QCDs did not change and remains at 70 ½. For individuals who may not need the additional income and are concerned about the impact of their future RMDs on their AGI may reduce the future size of their required distributions by beginning charitable distributions sooner. This has a benefit over conversion to ROTH IRA or withdrawing funds to reduce future RMDs as a QCD is not taxable and is not included in your AGI.
What funds at CFHZ qualify for a QCD?
Except for a Donor Advised Fund, you may gift to any existing fund at CFHZ including the Community’s Endowment, Scholarships, Nonprofit Endowments, Donor Designated, etc.
Can I establish a new fund at CFHZ with a QCD?
Except for a Donor Advised Fund, you may establish a new named or anonymous fund with your QCD. Minimum balances may apply depending on fund type.
What if I want to give to several charities through a QCD?
You can make as many QCDs as you like up to a cumulative amount of $100,000. Check with your plan administrator as they may have a minimum distribution amount or maximum number of distributions allowed.
CFHZ can be helpful if you wish to make QCDs to multiple charities. You may conveniently make one QCD to CFHZ and provide a list in advance of how you would like the funds distributed. Your gift can benefit a fund(s) at CFHZ or pass-through directly to your named charities. Contact us to discuss your options and what fees may apply.
If I have more questions, who should I contact?
We recommend you contact your tax advisor or plan administrator to discuss if an IRA QCD is smart for you. Contact Colleen Hill, VP of Development and Donor Services at chill@cfhz.org for more information on how CFHZ can partner with you and your advisors in making an IRA QCD to benefit CFHZ or other qualified charities.