Qualified Charitable Distributions

Why Qualified Charitable Distributions Might Be for You

A heart-shaped rock sits on a bed of moss with a stream flowing in the background.

Qualified Charitable Distributions (QCDs), also known as IRA Charitable Rollovers, are the savviest way for individuals aged 70½ or older to use their IRAs to maximize their charitable impact.

Making a QCD from your IRA can be a great option to lower your income taxes while protecting fresh water. If you’re subject to required minimum distributions (starting at age 73), QCDs count toward your required minimum distribution, effectively lower your adjusted gross income, and can bring about important tax benefits.

Want to contribute via QCD today? Share this form with your financial custodian. Want to learn more about QCD’s and how they can be a benefit to you? Keep reading below! 

What are QCDs?

QCDs are distributions from your Individual Retirement Account (IRA) made directly to a qualified nonprofit organization without having the distribution counted as taxable income.

QCDs are also sometimes referred to as IRA Charitable Rollovers.

Currently, up to $100,000* in IRA funds can be counted as QCDs annually, or $200,000 for married couples.

* The amount that donors can give to charity via QCD.

Who is Eligible?

If you are 70½ years of age or older and have a Traditional IRA, you are eligible to make a QCD.

What Are the Benefits?

QCDs can reduce your income taxes.

Typically, funds distributed from a Traditional IRA are included in your taxable income, which is likely to increase your overall tax burden. In some cases, this additional income may also move you into a higher tax bracket.

However, QCDs are an exception to this rule— funds go directly from your IRA to your chosen charitable organization without going to you first, lowering your adjusted gross income and effectively reducing your income taxes.

QCDs can satisfy Required Minimum Distributions.

Required Minimum Distributions (RMDs) are amounts you must withdraw annually from your Traditional IRA once you’re eligible (as of 1/1/2023, the age to start taking RMDs increased from age 72 to age 73, except for donors who turned 72 before January 1, 2023).

If you do not withdraw your RMD, you will face a penalty tax of 25% of the required withdrawal amount. QCDs can be used to meet this RMD requirement and avoid penalties.

Read more about RMDs on the IRS website.

QCDs maximize your charitable impact.

Because in most cases QCDs do not need to be recognized as income, charitable organizations receive the full amount of the transfer tax-free.

It’s a win-win situation that supports you and the causes you care about.

How Do I Get Started?

To make a QCD to Stroud Water Research Center, contact your financial custodian or simply email or call 610-910-0049.