The IRA Qualified Charitable Distribution (QCD) allows individuals age 70½ or older to make an outright gift of as much as $100,000 annually to 501(c)(3) charity such as the RSE Foundation from a traditional IRA. The withdrawal amount may count toward your annual required minimum distribution (RMD). Although the RMD is not required until age 72 (for 2022-23), the QCD can be particularly beneficial for donors who do not itemize and instead file the standard deduction.
The QCD must be paid directly from your IRA to the RSE Foundation.
Frequently Asked Questions
What is a Qualified Charitable Distribution (QCD)?
A QCD is an otherwise taxable distribution from an IRA owned by an individual who is 70½ or older that is paid directly from the IRA to a qualified charity.
When can I make a Qualified Charitable Deduction from my IRA?
You may make a QCD beginning at age 70½. A QCD can be particularly beneficial for donors who do not itemize and only file the standard deduction.
Can the Qualified Charitable Deduction offset a Required Minimum Distribution (RMD)?
Under current law, every IRA account holder must withdraw a Required Minimum Distribution (RMD) annually beginning at age 72. The RMD is treated as ordinary income for tax purposes. A qualified charitable distribution counts toward your required minimum distribution.
Do I receive an income tax deduction with a Qualified Charitable Distribution?
You do not receive a tax deduction for a QCD from a regular IRA since the transfer is not recognized as taxable income. Because a QCD reduces taxable income and is not an itemized deduction, the gift benefits even those donors who do not itemize.
Is my 401(k) eligible for making a Qualified Charitable Distribution?
No. However, it may be possible to transfer or rollover funds from a non-IRA qualified retirement plan (401(k), 403(b), etc.) to an IRA. Check with your retirement plan administrator for eligibility and guidelines. Once the new IRA is established, you may then initiate an IRA QCD.
Are there limits on the gift amount?
Your particular IRA plan may have a minimum for each distribution, however there is no IRS minimum. The withdrawal may not exceed $100,000 annually per individual for all such gifts. A married couple with separate IRAs may each transfer as much as $100,000 annually. Other limitations may apply depending on a donor’s specific circumstances.
How do I initiate an IRA Qualified Charitable Distribution (QCD)?
The money is a direct transfer that never passes through the hands of the IRA holder. Instead, the IRA custodian can either send a check directly to the charity or the account owner, who then hands it over to the charity. Contact your IRA administrator to request a Qualified Charitable Distribution. The RSE Foundation number is EIN 06-1633377.
Please have the check made out to “The RSE Foundation Inc.” and mailed:
The RSE Foundation, Inc.
Alumni Relations Processing Center
P.O. Box 7007
Albert Lea, MN 56007-8007
Note: For tax purposes, the date of the gift is the date the funds leave your IRA account (not the postmark on the envelope). It is important to allow sufficient time for the rollover check to clear to ensure that the funds are withdrawn during your preferred tax year.
What type of acknowledgment should I expect to receive from my IRA gift to the RSE Foundation?
The RSE Foundation sends an acknowledgment and statement that no goods or services were received in exchange for the gift to your IRA administrator. You will receive a letter of thanks that states the gift is an IRA QCD and confirms the designation. You will receive recognition gift credit for the full amount of your gift.
How do I report my Qualified Charitable Distribution?
A QCD is reported by your IRA custodian as a normal distribution on IRS Form 1099-R for any non-inherited IRAs. To report a QCD on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter “QCD” next to this line. You should keep the acknowledgment of the donation from the RSE Foundation for your tax records. Check with your tax advisor to confirm your personal tax reporting requirements.
If I have more questions, whom should I contact?
Contact Mark A. Vince ’75, RSE Foundation Treasurer at email@example.com.
The information provided here is not offered as tax or legal advice. Donors and potential donors should consult with a qualified tax advisor regarding their own specific circumstances, the tax and nontax considerations, and consequences associated with the gift described in this document.