Qualified Charitable Distributions

A Qualified Charitable Distribution (or QCD) is when individuals take distributions from their IRAs, it usually counts as income for tax purposes. QCDs, also called IRA Charitable Rollovers, are an exception. Individuals 70 ½ years of age or older can distribute up to $100,000 each year from their IRAs to their favorite 501(c)(3) organizations without counting the distribution as income. 

For more additional information on QCDs, please visit the IRS website

Are qualified charitable distributions for you?

Making a Qualified Charitable Distribution (QCD) can be a great option to lower your income taxes while doing good for others. If you’re 72 years or older, QCDs count toward your Required Minimum Distribution (up to $100,000), effectively lower your adjusted gross income and often bring about many tax benefits.

Required Minimum Distribution

The Required Minimum Distribution (RMD) is the smallest amount individuals 72 years and older must distribute from their IRA each year. The penalty for missing an RMD is 50% of the amount that was supposed to have been distributed.

If you’re between 70.5 and 72 years old, you don’t have an RMD yet, but you can still make a QCD. Doing so can lower your adjusted gross income and effectively reduce your income taxes.

To learn more, feel free to check out the IRS website for additional useful information on RMDs.

Note: contributions you make to your IRA after you turn 70 ½ may reduce the amount you are allowed to claim as a QCD. Please contact your IRA financial institution or your tax preparer for more information. 

Qualified Charitable Distribution trends

Qualified Charitable Distributions are growing rapidly. Across all nonprofits surveyed, the average growth in QCDs from 2017 to 2018 was a whopping 73.8%. Of all nonprofits surveyed, 92% saw an increase in QCD giving from 2017 to 2018. Just 7% saw a decrease. Those who saw a decrease were primarily very small nonprofits that had very few in both years.

How to sign up for FreeWill's QCD tool

The FreeWill QCD tool currently supports gifting from traditional IRA. To signup to use the customized tool please use this link and follow the provided instructions. 

2022 Qualified Charitable Distributions Report

FreeWill has published a free report on Qualified Charitable Distributions and how your organization can harness its power. Check out the report  here. 

Disclaimer: FreeWill is not a law firm, and does not provide legal advice. While FreeWill strives to ensure that its automated services are complete, they are meant purely as self-help forms. The materials and services are not substitutes for the advice of an attorney.

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