When we can, we work hard to save for our retirement years.
If you hold an Individual Retirement Account (IRA), you should know about Qualified Charitable Distributions (QCDs) and how you can use them to simultaneously reduce your tax burden and support nonprofits you love, like All Souls.
People who hold IRAs must take Required Minimum Distributions (RMDs) each year beginning at age 73 – even if you don’t need the funds. That RMD increases your taxable income and could potentially push you into a higher tax bracket, and sometimes triggers higher taxes on Social Security income.
Qualified Charitable Distributions allow individuals who are age 70½ or older to contribute directly from their IRA to a public charity like All Souls, reducing taxable income. An individual donor 70½ years old or older can contribute up to $111,000 per year in QCD. For married couples, each spouse can make QCDs up to the $111,000 limit for a potential total of $222,000. This distribution goes straight to the nonprofit, bypassing your taxable income. QCDs are also sometimes called IRA charitable distributions or IRA charitable rollovers.
If you are over 70 and hold an IRA, now is a great time of year to be thinking about this and taking a few easy steps to get ahead of the annual RMD deadline of December 31.
All Souls staff can help
Most financial institutions that manage IRAs make it relatively easy to send QCDs directly to charities, often with just a form or secure online request.
If you need help navigating your financial institution’s QCD process, would like step-by-step instructions recommended by fundraising pros, or even a sample letter you can use if your financial institution doesn’t have a standard QCD form or online process, All Souls staff can help.
Contact Michael Hamill Remaley at [email protected] or 917-753-4890.
Some other key QCD facts to keep in mind
Chances are, initiating a QCD with your IRA manager will be easy for you to handle on your own. Before you get started, know that:
- QCDs must go directly from the IRA to the charity. Donors cannot withdraw funds themselves and then write a check.
- Not all retirement accounts qualify. QCDs can only come from IRAs, not from 401(k)s or 403(b)s (although funds from such accounts can be directly rolled into a traditional IRA first and then you can take advantage of QCDs). QCDs can be made from a traditional IRA, inherited IRA, inactive Simplified Employee Pension (SEP) plan or inactive Savings Incentive Match Plan for Employees (SIMPLE) IRAs.
- No goods or services can be exchanged. QCDs cannot be used to buy event tickets or anything you receive with a fair market value benefit. They must be pure charitable gifts.
If you initiate a Qualified Charitable Distribution to make a donation to All Souls, it would be very helpful if you give us a heads-up by emailing me at [email protected]. Please include basic info about the financial institution source, the name on the IRA account and the amount you are directing as a donation to All Souls.
This will also help us prepare our records so that we can provide you with the appropriate donation acknowledgement record you’ll need for reporting your taxes. Donations made via QCDs are treated differently than donations made directly from the donor, so giving us a heads-up will help us ensure that your year-end statement is accurate.
QCDs are just one more way community members are supporting All Souls. Whether you have in abundance friendship, volunteering time, professional expertise, creative skills or financial resources to share, All Souls is a place that welcomes all that you are, and gratefully receives your gifts whenever you are ready to join in.
We are here to listen to your interests and help you figure out which opportunities feel right for you at this stage of your life.
In Gratitude,
Pamela Patton
Michael Hamill Remaley &
The All Souls Stewardship Committee
Cherie Henderson, Co-Chair
Lynn Randall, Co-Chair
Augusta Sterne