Available or not? A question about the IRA Qualified Charitable Distribution’s (QCD) availability we asked almost every year in the last decade since its introduction in the Pension Protection act of 2006. And each time Congress acted at the very last minute to extend it.
Now, thanks to a provision of The Protecting Americans from Tax Hikes Act of 2015 passed by the House and the Senate at the end of last week and signed into law by President Obama on Friday December 18, IRA Qualified Charitable Distributions are permanent.
Here are four quick QCD facts:
- IRA owners and beneficiaries age 70½ or older may donate up to $100,000 per year tax-free to eligible charitable organizations.The QCD needs to be paid directly to the charity.
- Amount contributed to a charity counts towards the 2015 RMD but is not includable in income. Tax deduction may not be taken for the same amount. If a greater than $100,000 is donated, the excess is includable in income; it can then be claimed by the tax payer if an itemized return is filed.
- Unlike the general tax deduction for charitable donations which is limited to a percentage of income, QCD offers full tax exemption up to $100,000 per taxpayer per year.
- QCD-eligible accounts include traditional IRAs, Roth IRAs, SEP and SIMPLE IRAs which no longer receive contributions.