IRA Qualified Charitable Distribution — Available Again

by Peter Sweetser

An IRA Qualified Charitable Distribution (QCD) is an alternative way for you to give to a charity without paying income tax. As part of the American Taxpayer Relief Act of 2012, passed on January 1st, Congress extended the QCD provision through December 31, 2013.

Here is how it works. First, to be eligible, the account holder must be 70½ or older at the time of the distribution. Second, a QCD can only be made from a Traditional or Roth IRA. Third, each individual can donate up to $100,000 per year to one or more qualified charities.

Unlike a typical IRA distribution, no income tax is paid. Please note: the taxpayer cannot take the contribution as a charitable deduction on their Federal Income Tax return — the amount is not included in the donor’s gross income. However, it can be counted as all or a portion of one’s IRA required minimum distribution. If you are uncertain, confirm with the organization that it is qualified to accept tax-deductible charitable contributions. Finally, the check should be made payable to the charity.

There are more details to consider so please call me at 800-932-3271 or email to see if an IRA QCD is right for you. As always, I recommend including your accountant or tax preparer in the decision.

Please see Fenimore disclosure.