Qualified Charitable Distributions
A qualified charitable distribution (QCD) is a direct transfer of funds from your IRA to the CFP Board Center for Financial Planning.
Set up a Direct Transfer to the Center
- Charitable contributions can only be made from IRAs, not 401ks or similar types of retirement accounts.
- You need to roll funds over from a 401k to an IRA if you want to make tax-free charitable contributions.
- If you withdraw the money from your IRA and later donate it, it won’t qualify as a tax-free qualified charitable distribution.
- Funds must be transferred directly from the IRA to the Center by the IRA trustee to qualify for the tax break.
- Make the distribution check payable to: CFP Board Center for Financial Planning
- Tax ID #: 74-2385850
- Mailing Address: CFP Board Center for Financial Planning
- Sashia Moore, Development Manager
- K Street NW, Suite 800
- DC 20005
Meet the QCD Requirements
- IRA owners must be age 70 1/2 or older to make a tax-free charitable contribution.
- Those who meet the age requirement can transfer up to $100,000 per year directly from an IRA to an eligible charity without paying income tax on the transaction.
- If you file a joint tax return, your spouse can also make a charitable contribution of up to $100,000, meaning couples can exclude up to $200,000 of their retirement savings from income tax if they donate it to charity.
- If you donate more than the maximum allowable amount, it is considered income and could be subject to income tax.
- Qualified charitable contributions must be made by December 31 each year in order to exclude that amount from taxable income.
- You don't need to itemize your taxes in order to make an IRA charitable distribution.
- However, you cannot additionally claim a charitable contribution tax deduction on a charitable distribution from your IRA.
- You can donate part of your required distribution to one or more charities, including the Center, and withdraw the rest of it as retirement income as long as you meet the minimum distribution requirement by the end of the calendar year.
Calculate Your Tax Break
- A $100,000 charitable contribution from your IRA could save you tens of thousands of dollars in taxes, depending on your tax rate.
- You don't have to make a huge donation to benefit from this tax break.
- For a retiree in the 24 percent tax bracket, an IRA charitable contribution of $5,000 could reduce your income tax bill by $1,200.
- Even a $1,000 donation would save you $240 in taxes.