The Many Benefits of Qualified Charitable Distributions (QCDs)
(aka IRA Rollovers)

Presented by Alvin H. Blitz, Esq., Chief Gift Planning Officer, Masonic Charities

What is a Qualified Charitable distribution (QCD)

  • A tax-free distribution to a “qualified” charity from a traditional IRA
  • IRA Owner must be at least age 701/2 to qualify for a QCD
  • The QCD amount is NOT included in the adjusted gross income of the IRA Owner
  • The IRA Owner cannot distribute more that $100,000 in QCDs in a calendar year
  • The IRA Owner does NOT get a charitable deduction since the QCD is not included in income

Guidelines for QCDs

  • Make sure QCD is for a “qualified” charity. Supporting organizations, donor-advised funds and private foundations are excluded.
  • Contact your financial advisor or go to the website for your IRA account and download the IRA distribution form. I would seek advise the first time you do this.
  • The check MUST be made out to the charity but can be sent to the charity or your address to be delivered to the charity.
  • NOTIFY the charity the check is coming or it may not know who it came from.
  • Can use QCD to pay pledges but not to fund planned gifts such as charitable gift annuities and charitable remainder trusts
  • Cannot use. For ”quid pro quo” gifts such as tickets for banquets or ballgames
  • Works best for Required Minimum Distributions (RMD) where donor diverts RMD to charity to avoid taxation
  • For 2020, IRA Owners do not have to take RMD
  • QCD is age 701/2 or older but under SECURE Act, IRA owners are not required to take RMD until age 72 if they turned 701/2 after December 31, 2019.

IRA Actions by Donor

  • Make request for check from IRA custodian. (See sample letter at end of presentation
  • Send charity notice that QCD is coming and what it is for. (see sample at end of presentation)
  • Make sure check is in the mail or delivered by December 31 of year of withdrawal
  • Make sure charity sends the required tax acknowledgement letter.

Possible Benefits of QCD Over Cash Gift

  • For nonitemizers, a QCD is the best way to give to charity since the donor does not have to take the QCD income
  • Once the donor makes his her first QCD, it becomes a simple way to give
  • Using a QCD to reduce RMD could avoid higher taxation on social Security benefits
  • For large IRA owners, using a QCD for a major gift can reduce future RMD and allow preservation of capital gain assets which get a step up at death

Neither Masonic Villages of the Grand Lodge of Pennsylvania nor Alvin H. Blitz, Esq. provide legal, financial, or tax advice. None of the information in The Blitz should be deemed legal, financial, or tax advice or acted upon by any person without prior consultation with appropriate professional advisors.