Please note that Portnoff Financial has joined with Tempus Wealth Planning and some information here may no longer be applicable. Please contact Jeremy Portnoff at 949-226-8342 (CA) or 732-226-3113 (NJ) for additional information.  We apologize for any confusion while we are in transition. 

West Coast Phone: 949-226-8342
East Coast Phone: 732-226-3113


IRA & Retirement Planning Topics

Want more information on IRA & Retirement Planning?

Submit the form below to receive monthly updates on various important IRA & Retirement Plan topics. 


Navigating Qualified Charitable Distributions in 5 Easy Steps

Using a QCD may significantly increase your tax savings under the new higher standard deduction. However, not everyone is eligible to do a QCD, and if you are, there are certain rules that apply.

What is a qualified charitable distribution (QCD)?

A QCD is a distribution from an IRA that goes directly to a qualifying charity and is not included in the taxable income of the IRA owner. A QCD cannot be made from an employer plan. A QCD can be up to $100,000 a year, per individual. Under the new tax law, QCDs are more valuable than ever.

1. Either an IRA owner or a beneficiary can do a QCD. The individual must be at least age70 ½ at the time of the transaction. Reaching age 70½ later in the year is not enough. Bothspouses can do a QCD when each spouse does the QCD from their own IRA.

2. A QCD can be made from an IRA, an inactive SEP or SIMPLE IRA, or a Roth IRA. Only pre-tax amounts can be used for a QCD, which makes the use of Roth funds veryunlikely. The QCD must be a direct transfer to a qualifying charity. A check payable tothe charity but sent to the IRA owner will qualify as a QCD, as will a check written from a“checkbook IRA” to a qualifying charity. If an IRA owner receives a check payable to themfrom their IRA and then later gives those funds to charity, that is not considered a QCD.

3. A charity must be a qualifying charity. It cannot be a donor-advised fund or a privatefoundation. A gift to a charitable gift annuity will also not qualify. A QCD to a charity where theIRA owner has an outstanding pledge will qualify and will not create a prohibited transaction.The QCD must satisfy all charitable deduction rules. If a distribution to a charity is more than$100,000, the amount over $100,000 is taxable to the IRA owner and is deductible on theowner’s income tax return. The excess amount cannot be carried over to a future tax year.

4. A QCD can satisfy a required minimum distribution (RMD). It is not limited to theamount of the RMD, but is capped at $100,000 a year. If an RMD is more than $100,000, anyamounts in excess of the QCD are taxable to the IRA owner.

5. The IRA custodian has no special tax reporting for a QCD. The QCD will be reportedon Form 1099-R as a regular distribution. The IRA owner will include the QCD amount on line15a of Form 1040. On line 15b, they will exclude the amount of the QCD and put the lettersQCD on that line. The amount of the QCD is thus excluded from the owner’s taxable income.The IRA owner also cannot take a charitable deduction for the QCD amount.

For more information on QCDs and other key areas of retirement planning, click here to contact the office nearest you.

Login to post comments.