By If you are required to take minimum distributions from your traditional IRA and are charitably inclined, you might benefit from a qualified charitable distribution (QCD).
A QCD allows you to transfer funds directly from your IRA to a qualified charity—excluding that amount from your taxable income. This can lower your adjusted gross income, reduce taxes on Social Security, lower Medicare premiums, and even reduce estimated tax payments.
To qualify, the funds must go directly from the IRA to the charity.
One way to simplify this process is by using a traditional IRA checking account—offered by custodians like Schwab or Fidelity—to write a check directly to the charity. However, this option is not available if your IRA is set up as a self-directed LLC.
With this method, please keep in mind that the charity must cash your check by December 31 for you to have a QCD for that year, and you must receive a written acknowledgment for gifts of $250 or more. Also, ensure that the charity is a 501(c)(3) organization and that you received no benefit in return for your contribution.
If you want to discuss QCDs, please call me on my direct line at 408-778-9651.