Qualified Charitable Distribution (QCD)

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The IRA Charitable Rollover, also known as a Qualified Charitable Distribution (QCD), allows individuals of eligible age to make a gift to GRACE from a traditional IRA.

Instead of taking the required minimum distribution from your IRA when you reach the distribution age, you can instead name GRACE as the recipient, which results in qualified charitable distributions (QCD). This can provide significant tax advantages.

You can also make a tax-free, qualified contribution over and above the minimum distribution amount.

The QCD must be paid directly from your IRA to GRACE.

WHY CONSIDER AN IRA CHARITABLE ROLLOVER?

  • Your gift will be put to use today, allowing you to see the impact your donation is making.

  • You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.

  • Since the gift doesn’t count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.

 

FAQs

I’m reaching my eligibility age in a few months. Can I make this gift now?

No. The legislation requires you must reach your eligibility age by the date you make the gift. You should talk to your financial advisor about when you should make a QCD.

Can the Qualified Charitable Deduction offset a Required Minimum Distribution (RMD)?

Under current law, every IRA account holder must withdraw a required minimum distribution (RMD) annually beginning at age 72 (as of 2022, visit IRS.gov to see if this date has changed).  The RMD is treated as ordinary income for tax purposes.  A qualified charitable distribution counts toward your required minimum distribution. 

Do I receive an income tax deduction with a Qualified Charitable Distribution?

You do not receive a tax deduction for a QCD from a regular IRA; the transfer is not, however, recognized as taxable income. Because a QCD reduces income and is not an itemized deduction, the gift benefits even those donors who do not itemize.

Is my 401(k) eligible for making a Qualified Charitable Distribution?

No. However, it may be possible to transfer or rollover funds from a non-IRA qualified retirement plan (401(k), 403(b), etc.) to an IRA. Check with your retirement plan administrator for eligibility and guidelines. Once the new IRA is established, you may then initiate an IRA QCD.

Are there limits on the gift amount?

While your IRA administrator may have a minimum for each distribution, GRACE has no minimums in accepting these gifts. The withdrawal may not exceed $100,000 annually per individual for all such gifts. A married couple with separate IRAs may each transfer as much as $100,000 annually.

How do I initiate an IRA Qualified Charitable Distribution (QCD)?

Contact your IRA administrator to request a Qualified Charitable Distribution. If you are able to write checks directly from your IRA account, please follow the instructions below under the question “How Do I Use My Check-Writing Facility To Transfer Funds From My IRA To GRACE?”.

Are there any restrictions on a Qualified Charitable Distribution?

A QCD is only eligible for outright donations and cannot be given:

  • to a Donor Advised Fund, supporting organization, or private foundation;

  • in exchange for benefits such as tickets to an event, membership, etc.; or

  • to fund a life income gift, such as a charitable gift annuity or charitable remainder unitrust.*

*You may withdraw funds from your IRA to establish a life income gift; however, the full amount of your withdrawal is treated as ordinary income for tax purposes. The charitable tax deduction from the life income gift may partially offset the withdrawal.

How do I use my check-writing facility to transfer funds from my IRA to GRACE?

Some IRA custodians offer check-writing privileges to allow you to make your gift to GRACE directly. If you wish to make a gift with a check from your IRA account, please make it out to “GRACE” and mail it along with this form to:

Godly Response To Abuse in the Christian Environment
4026 Wards Road
Unit G1, # 198
Lynchburg, VA 24502

Note: For tax purposes, the date of the gift is the date the funds leave your IRA account (not the postmark on the envelope). It is important to allow sufficient time for the rollover check to clear to ensure that the funds are withdrawn during your preferred tax year.

What type of acknowledgment should I expect to receive from my IRA gift to GRACE?

GRACE sends an acknowledgment and statement that no goods or services were received in exchange for the gift to your IRA administrator. Separately, you will receive a letter of thanks that states the gift is an IRA QCD and confirms the designation.

How do I report my Qualified Charitable Distribution?

A QCD is reported by your IRA custodian as a normal distribution on IRS Form 1099-R for any non-inherited IRAs. To report a QCD on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter "QCD" next to this line. You should keep the acknowledgment of the donation from GRACE for your tax records. Check with your tax advisor to confirm your personal tax reporting requirements.

 

Please contact GRACE at zane@netgrace.org for any additional instructions.

The information provided here is not offered as tax or legal advice. Donors and potential donors should consult with a qualified tax advisor regarding their own specific circumstances, the tax and nontax considerations, and the consequences associated with the gift described in this document.