Unlocking Generosity: Transform Your IRA into Vital Donations

June 5, 2024

Discover a powerful way to support the Truth in Accounting mission while maximizing your tax benefits. Did you know that a qualified charitable distribution from your IRA’s annual required minimum distribution can be structured to be tax-free? This means that the transferred amount is not taxable as long as it’s paid directly from the IRA to the charitable organization.

Utilizing a qualified charitable distribution can be a tax-efficient way for individuals with annuities or IRAs to support non-profit organizations while fulfilling their minimum distribution requirements.  

The Internal Revenue Service (IRS) states that individuals aged 70½ or older with individual retirement arrangements (IRAs) can make tax-free transfers of up to $100,000 annually to charitable causes. This is the 2023 reporting language, as the 2024 language has not yet been updated.
These transfers, termed qualified charitable distributions (QCDs), provide eligible older Americans with a convenient means to contribute to charity before the end of the year. Furthermore, for individuals aged at least 73, QCDs can fulfill the IRA owner's required minimum distribution (RMD) obligation for the year.

Don't worry, setting up a QCD is a straightforward process. If you're an IRA owner planning to make a QCD for 2024, we recommend reaching out to your IRA trustee as soon as possible. This will ensure that the trustee can complete the transaction before the year ends, making your charitable contribution hassle-free.

Typically, distributions from traditional IRAs incur taxes upon receipt. However, QCDs allow these distributions to become tax-free, provided they are directly disbursed from the IRA to qualifying charitable organizations like Truth in Accounting.
It's important to note that QCDs must be initiated directly by the IRA trustee to the designated charity. Any distribution to the IRA owner, such as electronic payments or checks addressed to them, does not qualify as a QCD.

Here's some good news for IRA owners aged 70½ or older at the time of distribution. You can exclude up to $100,000 of QCDs from your gross income each year. And if you're a married couple, both of you can individually exclude up to $100,000, potentially totaling a tax-free contribution of $200,000 per annum.

The QCD option remains available regardless of whether the eligible IRA owner itemizes deductions on Schedule A. Transferred amounts are exempt from taxation, and no deduction is applicable for the transfer. 
Disclaimer: This information comes directly from the IRS website linked in this document. Truth in Accounting is not responsible for tax advice. This information is simply meant as a charitable giving idea. Please consult your tax accountant for details such as age, dollar, reporting requirements, and limitations.

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