Qualified Charitable Distributions (QCDs)
QCDs are tax-free donations made directly from a retirement account to Pikes Peak Habitat for Humanity. These contributions can be made starting at age 70 1/2 or older and can satisfy required minimum distribution (RMD) requirements.
Limitations:
- You must be age 70 1/2 or older.
- Donations must go to a qualified charity.
- The QCD must come directly from the IRA account through your trustee and to the charity; you cannot withdraw the funds and make the donation directly.
- The maximum annual limit on QCDs is $105,000.
- A QCD cannot be claimed as an itemized charitable deduction on your taxes.
Benefits:
- It could reduce your adjusted gross income and, thus, lower your tax bracket and how much you pay in taxes.
- You can avoid the 25% penalty that is imposed if you don’t take your required minimum distribution (RMD) which begin at age 73.
- You don’t have to itemize deductions on your tax return to deduct a QCD from your taxable income.
As with all financial planning, it is important to consult your attorney or financial advisor to ensure compliance, maximum tax benefits, and help with legal documents.