On December 18th, 2015, President Obama signed into law legislation that includes a permanent extension of the qualified charitable distribution (QCD) sometimes referred to as IRA Charitable Rollover.
The Act permanently extends the ability of individuals to exclude qualified charitable distributions (QCDs) taken from an IRA from their gross income, UP TO $100,000 per year. An individual qualifies for this exclusion if they are at least 70 1/2 years of age and these distributions are transferred directly from their IRA to a qualified charity.
If you are not familiar with the allowable deduction for a contribution made directly from an IRA, below are some highlights:
- Donor must be 70 1/2 or older
- Must be from an owner’s or inherited IRA
- Only IRAs (other than ongoing employer SEP and/or SIMPLE IRAs) – not 401 (k)s, 403 (b) or other pension plans
- $100,000 maximum per taxpayer per year
- Not subject to charitable contribution percentage limits because not included in gross income
- Cannot be claimed as a deduction on tax return
- Direct to qualified charity:
- Public charity (but not donor advised funds or supporting organizations)
- Private operating foundations