Qualified Charitable Distributions

Qualified Charitable Distributions

In the past, we have helped several of our clients make distributions from their Traditional IRA accounts to charities.  The past several years, Congress waited and would then temporarily (and sometimes retroactively) pass laws that allowed these Qualified Charitable Distributions, which satisfies an account owner’s Required Minimum Distribution (RMD) in a given tax year without being taxed on the distribution.

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes (PATH) Act of 2015, which reinstated the IRA Qualified Charitable Distribution permanently.   This gives you the opportunity to make a gift of up to $100,000 from your IRA to a public charity(s) without incurring a tax bill on the distribution.  For clarity sake, this distribution and gift cannot be then claimed as a deduction for tax purposes.   

Who qualifies?

Owners of Traditional IRAs (not SEP or Simple IRAs) who have attained the age of 70 ½ (on the date of distribution) may distribute directly from their IRA to a charity up to $100,000 per year and exclude the contributed amount from their gross income for tax purposes. This amount can be counted towards the IRA’s annual required minimum distribution.

Who can receive IRA distributions?

The IRS has stated that any organization who is eligible to receive tax-deductible contributions can receive these Qualified Charitable Distributions, but there are some exceptions including a donor-advised fund, a supporting organization, a private foundation, and any distribution in connection with a charitable gift annuity.

If you are interested in doing a Qualified Charitable Distribution or know of someone who is, please contact our office to schedule a meeting to discuss the concept in more detail with your specific account and objectives.