Donating to a charity using a qualified charitable distribution (QCD) from an IRA

According to Fidelity Investments, if you are age 70½ or older, IRS rules require you to take required minimum distributions (RMDs) each year from your tax-deferred retirement accounts. This additional taxable income may push you into a higher tax bracket and may also reduce your eligibility for certain tax credits and deductions. To eliminate or reduce the impact of RMD income, charitably inclined investors may want to consider making a qualified charitable distribution. A qualified charitable distribution is a direct transfer of funds from an IRA custodian, payable to a qualified charity, such as The Vegetarian Resource Group. Up to $100,000 in charitable contributions made this way can be excluded from taxable income. With passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015, the QCD provision is now a permanent part of the Internal Revenue Code. This means you can plan your charitable giving and begin reviewing your tax situation earlier each year. The contribution must be made directly from the IRA custodian to the charity, so speak with the institution where your IRA is held, concerning the proper forms and the proper deadlines. This is not personal tax or legal advice. Speak to your tax and legal advisor for specific information for your situation.