You may be able to make a tax-free transfer of money directly from your IRA to CHILD, Inc.
Leave a legacy of child advocacy that provides hope for generations of families.
If you are at least 70 ½ years old and wish to make a charitable contribution with available funds from your individual retirement account (IRA), you may transfer funds per year directly from your IRA to a 501(c)(3) charitable organization through a qualified charitable distribution (QCD). The QCD will not be included in your adjusted gross income for IRS tax purposes and, therefore, may reduce your federal income tax liability and Medicare premium surcharges. A QCD is especially helpful if you are at least 73 years old because the QCD can be applied to offset the required minimum distributions (RMD) that you must withdraw from your IRA.
Learn More About QCD's
The following should be considered:
- The QCD limit may change from year to year. The QCD limit is per person, per year —not per IRA.
- A QCD may be made only from an IRA; other retirement plans such as 401(k), 403(b), and 457 accounts are not eligible.
- The QCD may not be distributed to you; it must be paid directly from the IRA to the charitable organization. Your IRA custodian should be well-versed with the QCD provisions and can assist you with this process.
- Because the amount transferred to a charitable organization through a QCD reduces your taxable income, it may not be claimed as an itemized deduction on your federal tax return.
- By reducing your adjusted gross income, the QCD may also help you meet a lower income threshold and potentially reduce additional Medicare premium surcharges.
- You should receive an acknowledgment from the 501(c)(3) organization for the QCD. Retain it with your tax records.
- State taxation rules for QCDs may vary.
Example 1: In 2024, Mary, a 75-year-old retiree must withdraw an RMD of $120,000 from her IRA. She does not need all of those funds and wishes to make a charitable contribution of $20,000 to CHILD, Inc. Mary may initiate a QCD of $20,000 directly from her IRA to CHILD, Inc., and then is only required to withdraw the remaining $100,000 from the IRA for her own use. By using the QCD, only the $100,000 will be taxable to her. (Mary’s spouse may also make a QCD of up to $105,000 from an IRA in 2024 if the 70 ½ age requirement is met.)
Example 2: If Mary is at least 70 ½ years old, but under 73 and therefore not required to make withdrawals from her IRA, any IRA funds she uses to make a QCD (up to the annual limit) may also be tax free for federal tax purposes.