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Sound Advice: April 20, 2022

Qualified Charitable Donations 

If you have an Individual Retirement Account (IRA) and give to charitable organizations, you may want to consider doing so using a Qualified Charitable Donation (QCD).  This option will be of particular interest to people who have reached the age (72) of the first Required Minimum Distribution (RMD). 

A donation from an IRA with a QCD must be made out and paid directly to an approved charity, not indirectly from an individual’s taxable account after the RMD has been transferred from the IRA.  It must be a cash donation, not a transfer of a property, tangible or intangible and it must be completed within the tax year.  The IRA owner can receive the check and deliver to the charitable organization, but cannot deposit the check and make out another one to the charity.

A list of approved charities can be found on the IRS website.  This group includes nonprofit groups that are religious, charitable, educational, scientific or literary in purpose or that work to prevent cruelty to children or animals.  The donation amount must be substantiated by the charity with a written receipt.

The donation provides a tax deduction and lowers the taxpayer’s adjusted gross income, which may help move into a lower tax bracket.  Having a lower number can allow the donor to reduce or eliminate the taxation of Social Security or other income, and remain eligible for deductions or credits that might be lost if the taxpayer had to declare the RMD as income.

The maximum cash donation using a QCD is $100,000 annually per person.  Of course, it may be a smaller donation, but the total distribution from the IRA for those having reached RMD time must reach the minimum.  The penalty for withdrawing less than the minimum is hefty: 50% of the amount that has not been withdrawn.

Joint gifting strategies are not available using QCDs.  A couple cannot take both of their aggregate RMD amounts from a single account and exclude their entire amount from their adjusted gross income.  Each of them must take the RMDs from their own accounts for each to qualify.

Roth IRA owners may also donate via the QCD route, but such donations will not be tax-deductible since distributions from Roth accounts are already tax-free. 

N. Russell Wayne, CFP®

Sound Asset Management Inc.

Weston, CT  06883



Any questions?  Please contact me at


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