Qualified Charitable Distributions

Qualified Charitable Distributions (QCDs), also known as IRA Charitable Rollovers, are the savviest way for individuals age 70½ or older to use their IRAs to maximize their charitable impact. If you have a traditional IRA account, you are eligible to donate directly to The Shelter from your account through a qualified charitable distribution (QCD). In addition, if you are age 73 or older, you must receive a required minimum distribution from you IRA each year, which is taxable. Many people are surprised to learn about the tax benefits of donating through their IRA instead of giving cash.

If you are 73 or older, there is a 25% tax penalty if you don’t withdraw your required minimum distribution from your IRA each year. In addition, if you withdraw the funds personally and then make a charitable donation, you will have to pay 37% federal income tax on those funds. But if you donate to The Shelter directly from your IRA, the donation will count towards your required minimum distribution, you will avoid the federal income tax, and you will be able to take the full amount of your charitable donation as a tax deduction.

Clearly, for IRA holders 73 years or older who have to take required minimum distributions but don’t need the extra funds to live on, QCDs are a great way to give.

Contact your financial, legal or tax adviser about the specifics of your donation.