Tax Reform: Consider making a charitable contribution of your RMD direct to charity

Consider making a charitable contribution of your required minimum distribution (RMD) direct to charity

A qualified charitable distribution (QCD) is a direct transfer of an IRA distribution to a qualified charity.  QCDs can be counted toward satisfying required minimum distributions (RMD) for the year, as long as certain rules are met.

QCDs allow you to exclude IRA distributions from taxable income, and thus avoid reporting a taxable IRA distribution and a subsequent charitable contribution deduction.  With the increase in the standard deduction for 2018, many taxpayers will no longer itemize their deductions and therefore their charitable contributions will have less of a tax impact as they have in the past.  The result is a direct reduction to adjusted gross income which can lead to several areas of tax savings, compared to a regular IRA distribution followed by a charitable contribution.

Helpful Resource: IRS Retirement Plan and IRA Required Minimum Distributions FAQs

If you have any questions, visit with one of our Tax experts.


Published: 9-18-18