When planning your Individual Retirement Account (IRA) withdrawal strategy, you might wish to consider making it a donation through a Qualified Charitable Distribution (QCD).
Traditional IRAs require you to take a minimum distribution once you reach age 72. Because you did not pay federal income taxes when you contributed the money to your account, you need to pay taxes when you withdraw it. However, after age 70½ you can avoid the added tax by donating your distribution to a charity! This means, rather than paying taxes on the money, it goes directly to support the mission of The Charles B. Goddard Center. You don’t need to be rich to do this, and it can be an effective tax strategy for many. Also, QCD is not subject to withholding. State tax rules may vary, so for guidance, consult a tax advisor. In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.
What are the requirements?
If you are 72 or older you are required by law to take a minimum distribution withdrawal from your IRA.
Must be at least age 70 ½ when the gift is made.
The law applies only to traditional IRA accounts. Other plans such as 401(k) or 403(b) plans do not qualify.
The QCD(s) must be made directly from your IRA administrator to The Charles B. Goddard Center for the Visual and Performing Arts
What are the benefits?
In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA.
Lower your adjusted gross income.
Reduce the impact of tax credits and deductions, such as Social Security and Medicare.
Save on taxes because the donation does not count as income.
See an immediate impact with your donation!
Ready to get started?
First, contact your IRA administrator and see if they have a form that you can use to make an IRA direct charitable gift request. If that is not available, follow these three easy steps:
Download and complete this letter template with all of your information.
Mail it to your custodian.
Sit back and relax! Your custodian will handle the rest.
A QCD is not subject to withholding. State tax rules may vary, so for guidance, consult a tax advisor.
When making a QCD, you must receive the same type of acknowledgment of the donation that you would need to claim a deduction for a charitable contribution.
A tax advisor can help you determine if both your IRA and charity qualify for QCDs.