A Qualified Charitable Distribution may be one of the simplest ways to support the Norwin Play It Forward Fund.
One generous supporter of the Norwin Play It Forward Fund recently made a $1,000 gift directly from an IRA through a Qualified Charitable Distribution (QCD).
The donor has chosen to remain anonymous — but wanted us to share the story for one important reason:
Other members of our community may be able to do the same thing.
What Is a Qualified Charitable Distribution?
A Qualified Charitable Distribution, commonly called a QCD, allows an individual who is age 70½ or older to transfer funds directly from an eligible Individual Retirement Account (IRA) to a qualified charitable organization.
Rather than receiving the IRA distribution personally and then making a charitable contribution, the funds are transferred directly from the IRA custodian to the charity.
For many donors, this can be an especially attractive way to support organizations and causes that matter to them.
Have You Reached the Age for Required Minimum Distributions?
Under current federal law, most IRA owners must begin taking Required Minimum Distributions (RMDs) at age 73.
If you are required to take an RMD, a Qualified Charitable Distribution can generally be used to satisfy all or part of your RMD for the year.
For example:
Suppose your Required Minimum Distribution is $5,000.
You could instruct your IRA custodian to send:
$1,000 directly to the Norwin Play It Forward Fund
and receive the remaining:
$4,000 as your regular IRA distribution.
The $1,000 QCD would count toward satisfying your $5,000 Required Minimum Distribution.
And that’s exactly the type of opportunity one of our supporters recently chose to use.
Why Consider a QCD?
A Qualified Charitable Distribution can offer several advantages.
The amount transferred directly to an eligible charity through a QCD generally is not included in your taxable income.
That is different from withdrawing money from your IRA yourself and then writing a check to the charity.
A QCD can also be beneficial for people who use the standard deduction and therefore may not otherwise receive an income-tax deduction for their charitable contributions.
Most importantly, it provides another way to put retirement assets that you may already be required to distribute to work supporting something important to your community.
How Do I Make a QCD?
The process is generally straightforward.
1. Contact your IRA administrator or financial advisor.
Tell them that you would like to make a Qualified Charitable Distribution from your IRA.
2. Specify the amount you would like to give.
Your QCD does not have to equal your entire Required Minimum Distribution. You may choose the amount that is right for you.
3. Have the funds sent directly from your IRA to the charitable organization.
This step is important. To qualify as a QCD, the distribution generally must be made directly by your IRA trustee or custodian to the eligible charitable organization.
4. Keep documentation of the gift for your tax records.
Your IRA custodian will also provide appropriate year-end tax reporting regarding distributions from your account.
A $1,000 Gift. A Much Bigger Idea.
We’re extremely grateful to the anonymous donor who made the $1,000 Qualified Charitable Distribution that prompted us to share this information.
But perhaps the most valuable part of the gift is the example it provides.
There are many people throughout the Norwin community who have spent decades saving responsibly for retirement. Some have now reached the point where federal law requires them to begin taking distributions from those accounts.
A portion of those distributions could become an investment in the young people, programs and opportunities supported through the Norwin Play It Forward Fund.
Your Required Minimum Distribution may be required.
What you choose to do with it can be entirely up to you.
Interested in Making a Qualified Charitable Distribution?
Contact your IRA custodian, financial advisor or tax professional and ask whether a Qualified Charitable Distribution to the Norwin Play It Forward Fund is appropriate for you.
We would also be happy to provide the information your financial institution needs to complete your contribution.
Important Tax Information
Qualified Charitable Distributions are subject to IRS requirements and individual tax circumstances vary. The Norwin Play It Forward Fund does not provide tax, legal or financial advice. Donors should consult their tax professional, financial advisor or IRA custodian to determine whether a QCD is appropriate for their individual circumstances and to confirm that the intended recipient qualifies to receive a QCD.