Are you 70½ years or older? Do you have an IRA? Did you know you can make a tax-free QCD with your RMD from your IRA? Read on.
The rules allowing a tax-free Qualified Charitable Distribution (QCD) directly from an IRA to a charity are still in effect for tax year 2017, making it easier to engage in proactive charitable giving to minimize the tax bite of an IRA’s Required Minimum Distribution (RMD).
To help satisfy your RMD from your IRAs, you may transfer funds from your IRAs directly to UUFH or any other qualifying charitable organization without the amount of your gift being subject to income tax. However, these amounts cannot also be declared as itemized deductions for charitable contributions.
To complete a QCD from an IRA to a charity, the IRA owner must:
- Already be age 70½ on the date of distribution.
- Submit a distribution form to your IRA custodian, requesting that a check be made payable to the charity. This ensures that no tax withholding is being made from the QCD to the charity. The money must actually go to the charity. As a non-taxable distribution, no withholding should be necessary.
The IRA custodian will make the distribution check payable to the charity. It may be sent directly to the charity, or to you to then forward to the charity.
Important: The key administrative requirement is that the distribution check must be made payable to the charitable entity. If the funds are made payable to the IRA owner and are then passed along to the charity, it is still a taxable distribution to the IRA owner and not a QCD.
With a little imagination and an understanding of tax laws, joyful giving is a win-win for us all. Some of our members are already using funds from their IRAs to fulfill their pledge and/or contribute to the UUFH Endowment Fund.
Planning ahead is important; the transfer can take two to three weeks. If you would like more information, please contact your tax advisor or Liz Curtis. Thank you!