Qualified Charitable Distribution—A Great Way to Support a Good Cause

Supporting causes you care about is a fulfilling and selfless act that can make a significant impact on the lives of those in need. It can also be a beneficial way to reduce your tax liabilities. One such method of charitable giving is through qualified charitable distributions (QCDs).

Qualified charitable distributions (QCDs) were introduced as a way to encourage charitable giving from individuals with IRAs. The distribution must meet certain criteria. To start, it must be made from an IRA, including traditional, rollover, and inherited IRAs, but not from a Simplified Employee Pension (SEP) or a Simple IRA. Next, the distribution must be made directly to a qualified charity. Finally, the donor must be at least 70 ½ years old at the time of the distribution.

QCDs are particularly beneficial for donors who have reached the age of 72 and have a traditional IRA. At this age, it is mandatory to take required minimum distributions (RMDs) from their traditional IRA, creating taxable income. However, QCDs can be used to satisfy the RMDs and provides tax benefits by directing the distribution to a charity.

Communicating with your IRA custodian is important to make certain they understand your intent. There may be additional processing time, so it is important to notify them well in advance. Also, for reporting on your tax return detailed records are needed, including the amount of the distribution, the date it was made, and the charity.

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In general, QCDs are a simple and tax-efficient way to support the causes you care about while lessening your tax burden. If you plan on making a charitable contribution and are eligible, consider making a qualified charitable distribution.

Overall, QCDs offer a tax-efficient and straightforward way to support charities while also reducing the tax burden on donors. If you are over the age of 70 ½ and looking for a way to support your favorite charity, consider making a qualified charitable distribution.

All contributions to the SaddleBrooke Community Outreach Scholarship Endowment Fund, must be made payable to the Community Foundation for Southern Arizona (CFSA) and designated for SBCO Endowment. (CFSA’s Tax ID is 94-2681765.) The minimum contribution to the fund is of $5,000.

Donations should be sent to: Community Foundation for Southern Arizona, SBCO Scholarship Endowment Fund, 5049 E. Broadway, Suite 201, Tucson, AZ 85711.