Did you know that you can support our neighbors in need through your Individual Retirement Account (IRA) with a Qualified Charitable Distribution (QCD)?

What’s a Qualified Charitable Distribution (QCD)?

A QCD is a distribution of funds from your IRA directly to a qualified charitable organization, such as the Society of St. Vincent de Paul — Madison. An IRA offers a tax-advantaged way to save money over many years and have an income stream in retirement.

QCDs are available to individuals aged 70½ or older who have an Individual Retirement Account (IRA). Many individuals chose to make QCDs to support their neighbors in need through St. Vincent de Paul — Madison because they are required to take money from their IRA, but do not need all of it for personal living expenses. Gifts through QCDs go directly to your chosen charity without passing through your hands. The dollar amount of the gift may be excluded from your taxable income and you don’t owe any taxes on the QCD, even if you don’t itemize deductions.

Some donors may also find that QCDs provide greater tax savings than cash donations. Your Qualified Charitable Distribution must be made directly from your IRA custodian to St. Vincent de Paul — Madison on your behalf. Each financial institution has its own process for initiating a qualified charitable distribution. As always, please consult your investment advisor.

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Have QCD Questions?

Contact Eric Fleming, Director of Development, if you’d like to explore QCDs as a giving option.

efleming@svdpmadison.org

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Why are QCDs So Popular?

Qualified Charitable Distributions are popular for donors because they offer significant tax benefits, including:

1. Tax-free Distributions

• QCDs are not considered taxable income, which means the funds you donate directly to a qualified charity won’t increase your adjusted gross income (AGI). This can lower your overall taxable income, which is particularly advantageous for retirees who are mindful of managing their tax liability.

2. Meeting RMD Requirements

• For individuals aged 73 and older, required minimum distributions (RMDs) must be taken annually from retirement accounts. QCDs count toward satisfying your RMD, allowing you to fulfill your obligation while supporting causes that matter to you. This makes QCDs an effective strategy for meeting mandatory requirements while avoiding a tax hit.

3. No Processing Fees

• Unlike some other forms of charitable giving, QCDs are typically free to process. Most IRA custodians don’t charge fees for sending a QCD, though you may need to cover the cost of mailing a check. This means more of your funds go directly to supporting the charity’s mission.

4. No Itemization Necessary

• With recent changes to tax laws, many taxpayers now take the higher standard deduction instead of itemizing deductions. QCDs don’t require itemization, which means you can still benefit from giving charitably even if you don’t itemize on your tax return.

5. Avoiding Higher Tax Brackets

• By lowering your AGI, QCDs can help you avoid being pushed into a higher tax bracket. This is especially important for those who are on the cusp of moving into a higher tax tier due to RMDs or other sources of income.

6. Preventing Phaseouts

• A lower AGI can also help prevent the phaseout of other tax benefits, such as deductions or credits that are subject to income limits. For example, QCDs might help you retain eligibility for certain medical deductions or avoid penalties on Medicare premiums.

How to QCD?

To make a Qualified Charitable Distribution, your IRA custodian must send the funds directly to the Society of St. Vincent de Paul — Madison on your behalf. Each financial institution has its own process for initiating a qualified charitable distribution.

Contact Eric Fleming, Director of Development, if you’d like to explore QCDs as a giving option.

Learn More

For more details, this article from Madison Community Foundation offers a good breakdown of Qualified Charitable Distributions, the benefits, and guidance to determine if they’re a good option for you. It may be helpful for you and your investment advisor: https://www.madisongives.org/advisors/advisor-blog/educating-clients-on-qcds.

Also, check out St. Vincent de Paul — Madison’s webinar, “Charitable Giving: 5 Beneficial Ways to Support the Charities You Love”: https://www.youtube.com/live/9syRrABV2rI?si=5WeF7fHIiPe-Z341&t=277.