Retirement plans like 401ks and IRAs are tools for achieving financial goals of retirement savings, lifetime charitable gifts, and planned gifts. Donors and nonprofits alike may benefit from proposed changes to QCDs.
Qualified Charitable Distributions, or “QCDs,” have been in the news a lot lately, especially in light of proposed SECURE Act 2.0 legislation that passed the House of Representatives in March and is now pending in the Senate.
Through a QCD, starting at age 70½, you can instruct the administrator of an IRA to direct up to $100,000 per year to a qualified charity. This helps your tax situation because you do not need to report the amount of the QCD as taxable income.
Here are four important reminders about QCDs:
1. Even though the SECURE Act changed the Required Minimum Distribution (RMD) age to 72 from 70 ½, the QCD age is still 70 ½.
2. QCDs cannot be made to donor-advised funds, but you can set up a field-of-interest or unrestricted fund at Waco Foundation to receive a QCD.
3. Under a version of the proposed SECURE Act 2.0 legislation, QCDs would be indexed for inflation. In addition, proposed legislation would allow you to make a one-time QCD of up to $50,000 to a charitable remainder trust or other split-interest entity.
4. Finally, be sure to ask your tax profession to help coordinate your QCDs with your Required Minimum Distributions. Proper planning will help avoid troublesome tax pitfalls.
Please reach out to me to learn more about QCDs and how Waco Foundation can help you achieve your planned giving goals.