Qualified Charitable Distributions, or “QCDs,” have been in the news a lot lately, especially in light of proposed SECURE Act 2.0 legislation that passed the House of Representatives in March and is now pending in the Senate.
Through a QCD, starting at age 70 ½, your client can instruct the administrator of an IRA to direct up to $100,000 per year to a qualified charity. In addition to the warm-and-fuzzy of making a gift, QCDs benefit your client’s tax situation because the client does not need to report the amount of the QCD as taxable income.
Here are three important reminders about QCDs:
- Even though the SECURE Act changed the Required Minimum Distribution (RMD) age to 72 from 70 ½, the QCD age is still 70 ½.
- QCDs cannot be made to Donor Advised Funds (DAFs), but your client can establish a different type of fund at Napa Valley Community Foundation with a QCD, or make a gift to an existing fund or project at the Foundation. Two examples: a scholarship fund; our Disaster Relief Fund.
- Under a version of the proposed SECURE Act 2.0 legislation, QCDs would be indexed for inflation. In addition, proposed legislation would allow a client to make a one-time QCD of up to $50,000 to a charitable remainder trust or other split-interest entity.
Please reach out to the team at Napa Valley Community Foundation to learn more about QCDs and how your client can establish a fund to support financial and tax goals as well as charitable giving goals.