Financial Tips

    Financial Tips

    Financial Tips

    Test Your Knowledge of Qualified Charitable Distributions
    (Updated: 10/09/2017)

    A qualified charitable distribution (QCD) is a direct transfer of funds from your IRA to a qualified charity.

    True or false?
    A QCD can be used to satisfy all or part of your required minimum distribution (RMD), and you won’t have to pay taxes on the amount distributed.

     

     

     

    Answer: True.

    If all of the requirements are met, a QCD is not a taxable event, meaning you won’t pay taxes on the distribution to a qualified charity, and the amount will be excluded from your income, which could help you avoid moving into a higher tax bracket. In addition, a QCD can satisfy all or part of your RMD for the year. The maximum QCD is $100,000 per taxpayer (not per account), per year.

    To be eligible to make a QCD:

    • You must be at least 70½ years old on the date of the distribution (not simply turning 70½ during the tax year when the distribution is made).
    • QCDs must be made from an individual IRA; they cannot come from SEP and SIMPLE IRAs or from any other type of employer retirement plan.
    • The distribution must be for the benefit of a 501(c)(3) organization. Private foundations, support organizations, and donor-advised funds do not qualify.

    In order for the QCD to satisfy your RMD for the current tax year, you must make the distribution (and ideally have the check cashed by the charity, completing the donation) by your RMD deadline, which is generally December 31.

    For more information about QCDs, see IRS Publication 590-B.

     

     

     

     

    View the Financial Tips Archive
     

    Fact vs. Fiction

    We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

    Fiction: The money in your flexible spending account carries over every year.

    Fact: With some flexible spending accounts (FSAs), you may forfeit your funds if you don't use them by year-end. Others offer a grace period of two and a half months or allow you to carry over up to $500 into the next year. (Check with your employer to see what options are available.) The best way to calculate your FSA allotment is at the end of the year; base the next year's FSA on the excess or deficit in your account at that time.

    View the Fact vs. Fiction Archive
     
    Last Updated: 10/10/2017