IRA Qualified Charitable Distribution – A Great Way to Give

Contributing from your IRA to The Lancer Fund - an IRA Qualified Charitable Distribution - is an easy way to reduce your tax burden and make a significant gift to support causes you care about.

In retirement the IRS requires you to withdraw a certain amount (a required minimum distribution) from your IRA each year whether you need the funds or not, and you pay income tax on every distribution you take. You can utilize part of your RMD to direct a gift to benefit the causes of your choice.

What is a Qualified Charitable Distribution (QCD)?

A Qualified Charitable Distribution is a distribution of taxable assets from a Traditional or Beneficiary Roth IRA paid to a qualified charity that is tax-free for the IRA owner. The Consolidated Appropriations Act made the QCD provisions permanent within calendar year 2017 and going forward.

Qualified Charitable Distribution Rules

For eligible tax years, individuals age 70 1⁄2 or over could exclude up to $100,000 from gross income for donations paid directly to a qualified charity from their IRA.

  • The donation satisfies any IRA required minimum distributions for the year
  • The amount excluded from gross income isn’t deductible
  • Donations from an inherited IRA are eligible if the beneficiary is at least age 70 1⁄2
  • Donations from an active SEP or SIMPLE IRA are not eligible
  • Donations from a Beneficiary Roth IRA are eligible if 70 1⁄2
  • Married individuals filing a joint return may exclude up to $100,000 donated from each spouse’s own IRA ($200,000 total)

Reporting on IRS Form 1099-R

Qualified Charitable Distributions (QCDs)* are reported as AGE BASED CODE 7. There is no special code on the 1099-R, clients should consult their tax advisor on the proper way to report QCDs to the IRS on their tax returns.

* Additional information about QCDs can be found in the 2017 IRS Publication 590-B.

Please consult with a qualified tax advisor about QCDs, as Holy Cross Preparatory Academy does not provide tax or legal advice.