People 70.5 and older can donate funds from their IRA accounts directly to qualifying nonprofits. This type of gift is called a Qualified Charitable Distribution, or QCD.
When you reach 73 years of age, you’re required to start making withdrawals from your pre-tax retirement accounts, including your 401(k)s and IRAs. The minimum dollar amount you must withdraw each year is called your Required Minimum Distribution (RMD).
Any time you withdraw money from your pre-tax retirement account, it’s considered taxable income and will be taxed according to your income bracket. This includes money you have to withdraw as part of your RMD. That’s where QCDs come in.
Making a donation as a QCD counts towards “withdrawing” your RMD for the year. And the amount of your donation isn’t counted toward your taxable income, which may help you save on income tax.
To make a QCD, you’ll have to fill out an IRA Charitable Distribution Form and submit it to your IRA custodian (the institution that manages your account). You’ll need your account information and our EIN identification number (36-3287099) for the form.
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