How a IRA Qualified Charitable Distribution Works:

Important Info to Make IRA Contributions to St. Vincent de Paul:

Legal Name: District Council of Contra Costa County Society of St. Vincent de Paul
Tax ID: 94-1448577

Money from an individual retirement account can be donated to 501-c-3 charity such as St. Vincent de Paul of Contra Costa County. What’s more, if you’ve reached the age where you need to take required minimum distributions (RMDs) from your traditional IRAs, you can avoid paying taxes on them by donating that money.

Normally, a distribution from a traditional IRA incurs taxes since the account holder didn’t pay taxes on the money when they put it into the IRA. But account holders aged 70½ or older who make a contribution directly from a traditional IRA to a qualified charity can donate up to $100,000 without it being considered a taxable distribution. The deduction effectively lowers the donor’s adjusted gross income (AGI).2

To avoid paying taxes on the donation, the donor must follow the IRS rules for qualified charitable distributions (QCDs)—aka, charitable IRA rollovers.

This tax break does mean that the donor cannot also claim the donation as a deduction on Schedule A of their tax return. Other donations to charity that don’t use IRA funds, however, can still be claimed as an itemized deduction

QCDs and Required Minimum Distributions

The donation can also help meet all or part of the IRA’s required minimum distribution (RMD) for the year.2 Notably, owners of traditional IRAs must start taking RMDs at age 72 or face tax penalties. Roth IRAs do not require distributions while the account holder is alive, so this provision doesn’t work for them.

The charity must receive the donation by Dec. 31 for the amount to be applied to that year’s tax return. Takings RMDs used to be required starting at age 70½, but following the passage of the Setting Every Community Up For Retirement Enhancement (SECURE) Act in December 2019, it was raised to 72

Using an IRA to make a charitable donation can help lower a tax bill and help a worthy cause. Distributions must be made directly to the charity, not to the owner or beneficiary. All distribution checks need to be made payable to the charity or they will be counted as taxable distributions.

Talk to your IRA custodian about how to make this happen and be sure to leave sufficient time for the funds to reach the charity.

Above information from Investopedia and utilizes primary source data from the Internal Revenue Service.