Qualified Charitable Distribution (IRA Charitable Rollover)

To qualify

• You must be 70½ or older at the time of gift.
• Distributions must be made directly from a traditional IRA account by your IRA administrator to your favorite Valley charity.
• Gifts must be outright, meaning they go directly to your favorite Valley charity. Distributions to donor-advised funds do not qualify.
• Gifts from 401(k), 403(b), "ongoing" SEP or SIMPLE IRAs, and other plans do not qualify. Ask your financial advisor if it would make sense for you to create a traditional IRA account so you can benefit from an IRA Qualified Charitable Distribution.

Tax Benefits

• IRA Qualified Charitable Distributions are excluded as gross income for federal income tax purposes on your IRS Form 1040.
• The gift counts toward your required minimum distribution for the year in which you made the gift.
• You could avoid a higher tax bracket that might otherwise result from adding an RMD to your income.

Example

John is 73 and wants to contribute $20,000 to your favorite Valley charity. He has a little over $500,000 in his IRA, and his required minimum distribution (RMD) for the year is approximately $19,000–$20,000, based on his prior year-end IRA balance. He can authorize the administrator of his IRA to transfer $20,000 directly to your favorite Valley charity as a Qualified Charitable Distribution (QCD). He cannot also claim a charitable income tax deduction for the QCD amount. However, because the entire distribution is excluded from his taxable income, he still receives a tax benefit. The $20,000 transferred to your favorite Valley charity counts toward his annual required minimum distribution, and John will not pay income tax on the amount given to charity.

Note

Under current law, Required Minimum Distributions (RMDs) begin at age 73. The earliest age for penalty-free IRA withdrawals is 59½, and the earliest age for making a Qualified Charitable Distribution (QCD) is 70½. QCDs are subject to an annual per-person limit of $111,000 in 2026.

Individuals between ages 70½ and 73 may make QCDs even though RMDs have not yet begun. Doing so can reduce future RMDs by lowering the IRA balance.

In addition, a one-time, lifetime election allows up to $55,000 in 2026 of a QCD to be used to fund certain split-interest gifts. This amount counts toward the annual QCD limit.

For more information, please contact us by phone at (203) 751-9162.

Important Notes:

If your administrator provides you an IRA checkbook, please note that the date of your QCD is NOT the date you send the distribution check, but the date that your IRA administrator transfers the funds to the charity. If you want your distribution check to be credited toward the current tax year, it is critical that you mail your check several weeks before the end of the year to ensure there is time for the check to be received by common reporting standards (CRS) and to clear your account. This is especially true if you are relying on those gifts to fulfill your required minimum distribution.

Be sure to check with your financial advisor to determine whether this gift plan is right for you. This information is not meant as tax or legal advice.