Looking to inflate your charitable contributions and deflate your taxable income?

IRA owners aged 70 ½ and older get a bump to the maximum Qualified Charitable Distribution (QCD) in 2024. Charitably minded individuals looking to satisfy Required Minimum Distribution requirements (RMDs), can now donate up to $105,000 to qualifying charitable organizations through a QCD in 2024 (up from $100,000 for 2023 and earlier). While the age at which account owners must begin taking RMDs has been increased to 73, the age at which QCDs are allowed remains at 70 ½.

The Rules are Simple

The funds must be transferred directly from your IRA custodian to the eligible charitable organization of your choice.

The Benefits are Great

The distributions are tax-free so you can satisfy your RMD and lower your taxable income all while making a charitable impact. QCDs are especially beneficial for taxpayers who are unable to itemize.

Since QCDs are not included in Adjusted Gross Income (AGI), they may help to maximize certain tax credits and deductions that can be phased out at higher AGI levels. QCDs may also help lower your Medicare premiums as these are also calculated based on AGI.

The $105,000 QCD limit for 2024 can be divided into smaller amounts and transferred to multiple organizations, or the entire amount can be transferred to a single organization.

Take Note

The $105,000 is per individual, so for a married couple where each spouse is age 70 ½ or older and each owns an IRA, each spouse can transfer $105,000 per year for a total of $210,000 per year.

One Final Thought

For those with IRAs who make a charitable impact annually through cash donations – keep in mind that the future inheritance of a traditional IRA to a loved one is taxable income to them. So why not make your donations through your IRA and save your tax-free cash to pass on to your loved ones!

If you have additional questions on QCDs, don’t hesitate to contact your tax professional at KT today!