A qualified charitable distribution (QCD) is a direct transfer of funds from your IRA to a qualified charity.
If all of the requirements are met, a QCD is not a taxable event, meaning you won’t pay taxes on the distribution to a qualified charity, and the amount will be excluded from your income, which could help you avoid moving into a higher tax bracket. In addition, a QCD can satisfy all or part of your RMD for the year. The maximum QCD is $100,000 per taxpayer (not per account), per year.
To be eligible to make a QCD:
- You must be at least 70½ years old on the date of the distribution (not simply turning 70½ during the tax year when the distribution is made).
- QCDs must be made from an individual IRA; they cannot come from SEP and SIMPLE IRAs or from any other type of employer retirement plan.
- The distribution must be for the benefit of a 501(c)(3) organization. Private foundations, support organizations, and donor-advised funds do not qualify.
In order for the QCD to satisfy your RMD for the current tax year, you must make the distribution (and ideally have the check cashed by the charity, completing the donation) by your RMD deadline, which is generally December 31.
For more information about QCDs, see IRS Publication 590-B.