Persons 70 and 1/2 years old can avoid some federal income taxes using one or more QCDs. A QCD (qualified charity distribution) is a direct transfer from their traditional IRA custodian to a qualified charity. QCDs exclude the amounts donated from taxable income. A QCD can be all of, part of, or exceed an annual RMD (required minimum distribution). This combination provides a tax advantage for those needing to take RMDs.
Recent federal tax law changes have significantly increased the standard deduction and therefore decreased the number of taxpayers using itemized deductions. If you have lost the advantage of deducting your church contributions, or have not been itemizing, because you take or will now take the standard deduction, QDC direct transfers from your traditional IRA to a charity can allow you to avoid tax on a withdrawal which would otherwise be taxable income.
St. Mark’s is a qualified 501(c)(3) charitable organization. Your investment custodian can make your direct transfer contribution by sending a check payable to St. Mark’s Episcopal Church (need our 501(c)(3) number and address). An alternative method could be an electronic funds transfer (EFT) to our checking account but this requires more information (501(c)(3) number, bank name, account number, and routing number). Contact the church office for the required information for either method.
You can have the QDC/RMD for each year be sent in one lump sum or be spread out over the whole year, or any part of the year, such as monthly. St. Mark’s will include these donations on your contribution record sheet.
St. Mark’s offers this method of making contributions. Of course, the decision is yours. St. Mark’s is not a tax adviser. You should consult a tax adviser or your IRA custodian before making your decision to do this.
Here are several important points about QCDs:
- You must be at least 70 1/2 years old and have a traditional IRA as the QCD source.
- 401(k) and similar retirement accounts are NOT eligible for QCDs.
- QCD funds must be transferred directly to a charity by December 31 of the tax year.
- Itemizing on your taxes is NOT required for a QCD.
- If you do itemize, the transferred funds cannot also be claimed as a charitable deduction, because the QCD is not taxed.
Don Nancarrow, Treasurer