If you are 70.5 years of age or older, an IRA owner, and charitably inclined, a Qualified Charitable Distribution (QCD) may be of interest to you. The QCD is an IRS rule that allows those who are in the required minimum distribution stage, to redirect the funds to a qualified charity tax free.

Taking a step back- the required minimum distribution (or RMD) is an amount that the IRS requires everyone over the age of 73 who has a qualified plan, to take out each year. The amount varies by account value and the age of the owner. These distributions are considered taxable income and are taxed at the federal and state level. Forgetting to take an RMD results in a penalty of 50% of the amount that was to be taken- so it is very important to make sure its out before the end of the year. However, IRA owners that are 70.5 or older are allowed to make QCD’s before the RMD age.

Not everyone needs the RMD money and in some cases the distribution can push the account owner into a higher tax bracket. The QCD moves the money directly from the IRA to the charity tax free. The owner never “receives” the money, so they are never taxed on the amount. The charity gets the full amount tax free for immediate use. Also, the RMD can be split among more than one charity, or can be partially given to a charity and partially kept by the owner. The owner is only taxed on the amount they personally receive from the IRA. This rule is extremely flexible but has one limitation- only $105,000 of the RMD can be used for the QCD annually.

Important notes to consider before doing a QCD;

• The distribution is NOT the same as a charitable donation. If you itemize, a QCD is not includable as a deduction. The account owner is not taxed on the distribution only.
• Only IRA owners can make QCDs. i.e. IRA, SEP IRA, SIMPLE IRA, Inherited IRA’s and others
• You must be 70.5 to do a QCD
• The QCD amount is excluded from federal, state, Medicare, and social security tax.
• The distribution could lower the taxable estate of the IRA owner
• You should ALWAYS seek the professional guidance from a professional tax advisor before doing a QCD.

In order to make a Qualified Charitable Distribution (QCD) to Wheeling Health Right or any other charities, you must contact your IRA custodian. In some cases, you made need to call them, or they may have an QCD instruction form on their website. If you have any questions about making a Qualified Charitable Distribution (QCD) from your IRA to Wheeling Health Right, please contact Gary Mulhern, Director of Development, at 304-233-1135, or via email at gmulhern@wheelinghealthright.com.