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Navigating Qualified Charitable Distributions in Five Easy Steps

What is a qualified charitable distribution (QCD)?

A QCD is a distribution from an IRA that goes directly to a qualifying charity and is not included in the taxable income of the IRA owner. A QCD cannot be made from an employer plan. A QCD can be up to $100,000 a year, per individual.


1. Either an IRA owner or a beneficiary can do a QCD. The individual must be at least age 70 ½ at the time of the transaction. Reaching age 70½ later in the year is not enough. Both spouses can do a QCD when each spouse does the QCD from their own IRA.


2. A QCD can be made from an IRA, an inactive SEP or SIMPLE IRA, or a Roth IRA.
Only pre-tax amounts can be used for a QCD, which makes the use of Roth funds very unlikely. The QCD must be a direct transfer to a qualifying charity. A check payable to the charity but sent to the IRA owner will qualify as a QCD, as will a check written from a “checkbook IRA” to a qualifying charity. If an IRA owner receives a check payable to them from their IRA and then later gives those funds to charity, that is not considered a QCD.


3. A charity must be a qualifying charity. It cannot be a donor-advised fund or a private foundation. A gift to a charitable gift annuity will also not qualify. A QCD to a charity where the IRA owner has an outstanding pledge will qualify and will not create a prohibited transaction. The QCD must satisfy all charitable deduction rules. If a distribution to a charity is more than $100,000, the amount over $100,000 is taxable to the IRA owner and is deductible on the owner’s income tax return. The excess amount cannot be carried over to a future tax year.


4. A QCD can satisfy a required minimum distribution (RMD). It is not limited to the
amount of the RMD, but is capped at $100,000 a year. If an RMD is more than $100,000, any amounts in excess of the QCD are taxable to the IRA owner.


5. The IRA custodian has no special tax reporting for a QCD. The QCD will be reported on Form 1099-R as a regular distribution. The IRA owner will include the QCD amount on line 15a of Form 1040. On line 15b, they will exclude the amount of the QCD and put the letters QCD on that line. The amount of the QCD is thus excluded from the owner’s taxable income. The IRA owner also cannot take a charitable deduction for the QCD amount.

Please consult a tax advisor to help determine if both your IRA and charity qualify for QCDs.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ed Slott Elite IRA advisor group is not affiliated with LPL Financial or Hittinger Financial.

Local Wealth Advisor Celebrates the 20th Anniversary of the Roth IRA Member of Ed Slott’s Elite IRA Advisor GroupSM Acknowledges Milestone by Offering Insight to Whitehall’s Retirement Savers  

Whitehall, PA - May 17, 2018 – This January marks the 20th anniversary of the Roth IRA. First made available to American investors in January of 1998, a Roth IRA is an individual retirement account that is funded with after-tax dollars and provides tax-free earnings and income for retirement. In honor of this significant milestone, Kevin L. Hittinger, and Hittinger Financial is spreading the word about the benefits of this retirement savings vehicle.

“The 20th anniversary of the Roth IRA serves as a good reminder to examine why this type of retirement account might be right for you,” said Hittinger. “There are several benefits that come with a Roth IRA, including tax-free withdrawals as long as they are considered qualified and distributions in retirement. Someone who may have saved a million dollars in their traditional IRA may only see half of that amount after they pay income taxes. The beauty of the Roth IRA is that it allows you to contribute after-tax dollars, which can help you avoid a tax time bomb in retirement.”

“I am a big proponent of Roth IRAs, as contributions today can provide tax-free money in retirement, when you need it most,” said Ed Slott, CPA, founder of Ed Slott and Company and a nationally-recognized IRA expert who was named “The Best Source for IRA Advice” by The Wall Street Journal. “Unfortunately, the rules surrounding these retirement accounts are as confusing as ever, so it is important to work with someone who specializes in them.”

Hittinger is a member of Ed Slott’s Elite IRA Advisor Groupâ„ , an exclusive membership group dedicated to the mastery of advanced retirement account and tax planning laws and strategies. Members of Ed Slott’s Elite IRA Advisor GroupSM attend semiannual live training events and have year-round access to Ed Slott and Company’s team of retirement experts for consultation on advanced planning topics.

To determine whether a Roth conversion is right for you, it may be beneficial to work with a financial professional who receives specialized training in the ‘second half’ of the retirement game, the distribution phase. “As a member of Ed Slott’s Elite IRA Advisor GroupSM, I take pride in knowing that I am up to speed on the latest retirement strategies and able to provide my clients with the help they need to pursue a successful retirement,” said Hittinger.

“Over the last 20 years, a lot has changed for Roth IRAs,” said Slott. “With ever-changing laws, including Congress’s recent decision to eliminate Roth recharacterizations, it is more important than ever for financial professionals to receive ongoing training. I commend Hittinger for prioritizing his education and taking the necessary steps to understand the intricacies of retirement accounts and the tax laws that impact them.”

ABOUT ED SLOTT AND COMPANY, LLC: Ed Slott and Company, LLC is the nation’s leading provider of technical IRA education for financial advisors, CPAs and attorneys. Ed Slott’s Elite IRA Advisor GroupSM is comprised of nearly 400 of the nation’s top financial professionals who are dedicated to the mastery of advanced retirement account and tax planning laws and strategies. Slott is a nationally-recognized IRA distribution expert, bestselling author and professional speaker. He has hosted several public television specials, including his latest, “Retire Safe & Secure! With Ed Slott.” Visit www.irahelp.com for more information.

About Hittinger Financial: Our firm is built on the time-honored American values of TLC - trust, loyalty and credibility. These values, together with a client focused gourmet service makes for a blue ribbon combination! Hittinger Financial was established with the foremost goal of assisting people in the pursuit of their retirement dreams. We aspire to provide the highest standards of financial knowledge and acumen, along with distinctively personalized service; thereby earning an esteemed reputation among our clients and throughout the financial industry. We strive to assist you in creating financial stability by effectively managing your financial opportunities and challenges so that you can pursue the things that matter most in life to you!


Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Hittinger Financial are separate entities from LPL Financial.

Ed Slott and Company is not affiliated with LPL Financial, Private Advisor Group or Hittinger Financial.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

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