Rules And Requirements For Doing A Qualified Charitable Distribution (QCD) From An IRA by Michael Kitces

Michael Kitces has posted a summary of the rules for doing a tax-free qualified charitable distribution (QCD) from an IRA to a public charity in order to satisfy the annual required minimum distribution obligation. To do so, an IRA owner must already be aged 70 and a half on the date of distribution, submit a distribution form to the IRA custodian requested a check made out directly to the charity, ensure that no tax withholding is being done, and send the check directly to the charity. Kitces says,

With the Protecting Americans from Tax Hikes (PATH) Act of 2015, though, the QCD rules have finally been made permanent, making it easier to engage in proactive charitable giving strategies that help to minimize the tax bite of an IRA’s Required Minimum Distribution (RMD) obligations.

However, obtaining the tax benefits for doing a QCD from an IRA to a charity requires meeting very specific requirements, including a minimum age limitation, a maximum dollar amount limitation, and contributing to only certain types of eligible (public) charities (rendering private foundations, donor-advised funds, and split-interest charitable trusts all ineligible).

In addition, there is the most stringent requirement – though also the easiest to satisfy – that for an IRA distribution to qualify as a QCD, the check cannot be made payable to the IRA owner and instead must be made payable directly to the charitable entity (though the check payable to the charity can be sent to the IRA owner and forwarded on to the charity).

Continue reading the full post here: Rules To Do An IRA Qualified Charitable Distribution

Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal

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