The Qualified Charitable Distribution (QCD) is an excellent way to show your support for Wells College and receive tax benefits in return. As you plan your required minimum distributions (RMD), consider using your IRA account to make the most of your charitable giving. You receive a tax benefit even if you take the standard deduction!
It’s important to consider your tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to share this gift plan with your financial advisor.
John is 73 and wants to contribute $20,000 to Wells College. He has somewhat over $500,000 in his IRA, and his minimum required distribution would be about $20,000. He can authorize the administrator of his IRA to transfer $20,000 directly to Wells College in a "qualified charitable distribution" or QCD. John will not be eligible for a charitable income tax deduction, but because the entire amount of the QCD is excluded from income, he still receives tax savings. The $20,000 distributed to Wells College will be counted toward his annual minimum required distribution (MRD), and he will not pay income tax on the portion given to charity.
Note: 73 is the age when required to take out the RMD. The earliest age John can withdraw voluntarily from his retirement is 59.5. And the earliest he can make a QCD is 70.5. These numbers can get confusing because if John is between 70.5 and 73, he can still make a QCD but will not enjoy the tax advantage if he is not taking out a distribution.
The QCD allows individuals 70 ½ and older to make direct distributions up to $100,000 per year to 501(c)(3) charities without having to count the distributions as income for federal income tax purposes. No charitable deduction may be taken, but if you are 73 or older, distributions will qualify for all or part of the IRA owner’s required minimum distributions.
Individuals 70 ½ or older at the time of the contribution (you have to wait until 6 months after your 70th birthday to make the transfer).
Up to $100,000 per year. The distribution must be outright to charity.
Distributions must come from your IRAs directly to Wells College. If you wish to help us with a gift from another retirement asset such as a 401k, 403b, etc., you must first roll those funds into an IRA. Then you can direct the IRA administrator to distribute the funds from the IRA directly to Wells College.
Maybe yes, but subject to a much lower dollar limitation. Please contact us for details.
No, not at this time.
We will give you full credit for the entire gift amount. You will also receive a letter, which states that the gift qualifies as a QCD to use for tax reporting purposes.
Yes, every individual who is the owner of a traditional IRA can use the Qualified Charitable Distribution for up to $100,000 each year.
Share this information with your financial advisor. Our office can provide additional information and examples of this gift plan. Call us. We would be delighted to help.
We offer a sample letter you can send to your plan provider to initiate the distribution. Please let your plan administrator know this gift must be sent prior to December 31 to qualify as a charitable distribution for the tax year. Make sure you contact us by phone at 315.364.3275 when you direct the distribution so we can look for the check from your IRA administrator.
For more information, please contact us by phone at 315.364.3275.
If your administrator provides you an IRA checkbook, please note that the date of your QCD is NOT the date you send the distribution check, but the date that your IRA administrator transfers the funds to the charity. If you want your distribution check to be credited toward the current tax year, it is critical that you mail your check several weeks before the end of the year to ensure there is time for the check to be received by common reporting standards (CRS) and to clear your account. This is especially true if you are relying on those gifts to fulfill your required minimum distribution.
There are several ways to send a gift from a qualified retirement account to Wells College. Once you’ve decided how you want the check sent to us, follow the appropriate procedure below.
If you are requesting that your IRA administrator send a check directly to Wells College:
If you have check-writing capability on your IRA account:
If your IRA administrator is sending the check directly to you, the check must be payable to Wells College:
An important note: No matter how your check is sent to Wells College, we need your name and address to accompany the check in order to correctly credit and acknowledge your gift.
Questions? Please contact us by phone at 315.364.3275. We are here to help.
Be sure to check with your financial advisor to determine whether this gift plan is right for you. This information is not meant as tax or legal advice.
The gift planning information presented on this site is intended as general. It is not to be considered tax, legal, or financial advice. Please consult your own personal advisors prior to any decision.