Notes from the Endowment Committee

In year-end legislation, the Consolidated Appropriations Act of 2016 finally made permanent qualified charitable distributions (QCDs) from individual retirement accounts. Because QCDs are finally permanent, now’s a good time to review the rules. 

A QCD permits annual direct transfers to a qualified charity totaling up to $100,000 of tax-deferred IRA savings. Funds that have been distributed from the IRA to the IRA owner and are then contributed to charity don’t qualify. QCDs offer advantages over taking a taxable IRA distribution and then contributing the proceeds of that distribution to a charity. That’s because taxable IRA distributions must be included in adjusted gross income. Importantly, QCDs automatically satisfy required minimum distributions (RMDs) for the year when the QCD is made. That’s a real advantage for a charitably minded IRA owner who doesn’t need RMD to live on.

Only individuals who’ve attained age 70 ½ may make QCDs. The charitable organization must be an organization that qualifies for a charitable income tax deduction of an individual. Beth Sholom B’nai Israel qualifies as such an organization. The charity that receives the donation must provide the same contribution acknowledgement needed to claim a charitable tax deduction. Failure to obtain the acknowledgement will quash the QCD. QCDs may be made from any IRA or individual retirement annuity, but not from a simplified employee pension, a simple retirement account, or an inherited IRA.

For further information, contact a member of the Endowment Committee and remember to discuss this and all other tax matters with your tax advisor before taking any action.