Traditional IRA distributions are generally taxable in the year you receive them. However, there are a few exceptions that can make the distribution non-taxable. One of those options is to make a qualified charitable distribution.
A qualified charitable distribution (QCD) is a nontaxable distribution from your IRA account made directly by the trustee of your IRA to a qualified charitable organization.
Some highlights of qualified charitable distributions are:
- Non-taxable to you (non-taxable if the payment is made directly by the trustee of your IRA to qualified charitable organization)
- Must be 70 ½ years old.
- These distributions can be part or all of required minimum distribution (RMD)
- The maximum annual exclusion amounts for qualified charitable distributions are $100,000 per spouse annually.
- The distribution is non-taxable, and the charitable donations are non-deductible.
- The distributions are reported on Form 1099-R and are required to be reported on your annual income tax return.
- You are still required to get written acknowledgment of the donation from the qualified charitable organization that must include the following:
- The amount of cash you contributed.
- Whether the qualified organization gave you any goods or services as a result of your contribution
- Date(s) contribution were made.
Qualified charitable distributions are a great way to reduce your taxable income while also allowing you to support charitable organizations of your choosing. If you have any questions about these distributions or other options for your retirement accounts, don’t hesitate to give our office a call at 307-577-4040.