Good News and Important Reminders About QCDs
UPDATE: The Consolidated Appropriations Act of 2023 was signed into law on Dec. 29, 2022. Read the latest update.
Qualified Charitable Distributions, or "QCDs," have been in the news a lot lately, especially in light of proposed SECURE Act 2.0 legislation that passed the House of Representatives in March and is now pending in the Senate.
Through a QCD, starting at age 70 ½, your client can instruct the administrator of an IRA to direct up to $100,000* per year to a qualified charity. This helps your client's tax situation because the client does not need to report the amount of the QCD as taxable income.
Here are four important reminders about QCDs:
- Even though the SECURE Act changed the Required Minimum Distribution age to 72* from 70 ½, the QCD age is still 70 ½.
- QCDs cannot be made to donor-advised funds, but your client can set up a field-of-interest or designated fund at the community foundation to receive a QCD.
- Under a version of the proposed SECURE Act 2.0 legislation, QCDs would be indexed for inflation. In addition, proposed legislation would allow a client to make a one-time QCD of up to $50,000 to a charitable remainder trust or other split-interest entity.
- Finally, be sure to help your clients coordinate their QCDs with their Required Minimum Distributions. Proper planning will help avoid troublesome tax pitfalls.
To learn more about QCDs and how your clients can establish a fund to support their financial and charitable goals, contact Laura Lederer at 330-436-5611 or firstname.lastname@example.org. We're always available to answer your questions about philanthropy or to schedule a personal consultation with you and your clients – all at no cost.
*The required minimum distribution age increased to 73 as of Jan. 1, 2023. The 2024 QCD limit is $105,000.
This content is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.