{"id":17080,"date":"2024-10-22T19:46:04","date_gmt":"2024-10-23T00:46:04","guid":{"rendered":"https:\/\/www.sfw.cpa\/news-and-guides\/?p=17080"},"modified":"2024-10-22T14:46:05","modified_gmt":"2024-10-22T19:46:05","slug":"get-the-word-out-about-ira-qualified-charitable-distributions","status":"publish","type":"post","link":"https:\/\/www.sfw.cpa\/news-and-guides\/get-the-word-out-about-ira-qualified-charitable-distributions\/","title":{"rendered":"Get the word out about IRA qualified charitable distributions"},"content":{"rendered":"

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The SECURE 2.0\u00a0Act made some enhancements to IRA qualified charitable distributions (QCDs) that may benefit your not-for-profit organization \u2014 so long as donors know about them. You can encourage your supporters to contribute more by boning up on the new rules and communicating their tax advantages.<\/p>\n

QCDs to RMDs<\/strong><\/p>\n

First, the basics: QCDs were established in 2006 and became permanent in 2015. Taxpayers age 70\u00bd or older are allowed to make QCDs up to an annual limit from their IRAs directly to a qualified charity.<\/p>\n

A charitable deduction can\u2019t be claimed for a QCD, but the QCD amount is excluded from the donor\u2019s taxable income. And the QCD can be used to satisfy the IRA owner\u2019s required minimum distribution (RMD), if applicable.<\/p>\n

SECURE 2.0 enhancements<\/strong><\/p>\n

SECURE\u00a02.0, signed into law in 2022, includes some significant QCD enhancements. Beginning this year, what was previously a $100,000 annual distribution limit is now indexed annually for inflation \u2014 $105,000 in\u00a02024.<\/p>\n

SECURE\u00a02.0 also created a new QCD opportunity starting in 2023. Taxpayers can make a once-per-lifetime QCD of up to $50,000, annually indexed for inflation ($53,000 in 2024), through a split-interest entity. These include charitable gift annuities, charitable remainder annuity trusts and charitable remainder unitrusts. Split-interest entities generally allow donors to make gifts to your nonprofit while creating an income stream for themselves. After a designated period of time, the balance goes to your organization.<\/p>\n

As with regular QCDs, the amount of a split-interest entity QCD isn\u2019t deductible, but it counts toward RMDs and isn\u2019t included in the donor\u2019s taxable income. Spouses can each make a QCD to the same split-interest entity to double the gift. Split-interest entities must pay a 5% minimum fixed percentage annually for the life of the donor or the donor\u2019s spouse, and these payments are taxed as ordinary income.<\/p>\n

Boost donations<\/strong><\/p>\n

How can you get the word out and boost donations? Consider preparing a presentation, brochure or both on how QCDs work, stressing the tax advantages for donors. A QCD might be especially tax-smart for donors\u00a0who:<\/p>\n