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Donating using a Qualified Charitable Distribution

Required Minimum Distribution - How the RMD Rules Work

The required minimum distribution (RMD) rules limit the time retirement plan assets can grow tax-deferred by forcing qualified plan participants and IRA owners to begin taking annual distributions non later than their required beginning date. 


RMD Commencement Age

RMD Age        Birth Date

Age 70 1/2      Before 7/1/1949

Age 72            7/1/1949 - 12/31/1950

Age 73            1/1/1951 - 12/31/1958

Age 75            On or after 1/1/1959

A Qualified Charitable Distribution (QCD) is a direct transfer of funds from your IRA, payable directly to a qualified charity. Amounts distributed as a QCD can be counted toward satisfying your RMD for the year, up to $100,000. The QCD is excluded from your taxable income. This is not the case with a regular withdrawal from an IRA, even if you use the money to make a charitable contribution later on. If you take a withdrawal, the funds would be counted as taxable income even if you later offset that income with the charitable contribution deduction.

Why is this distinction important? If you take the RMD as income, instead of as a QCD, your RMD will count as taxable income. This additional taxable income may push you into a higher tax bracket and may also reduce your eligibility for certain tax credits and deductions. To eliminate or reduce the impact of RMD income, charitably inclined investors may want to consider making a qualified charitable distribution (QCD). For example, your taxable income helps determine the amount of your Social Security benefits that are subject to taxes. Keeping your taxable income level lower may also help reduce your potential exposure to the Medicare surtax.

Requirements for a Qualified Charitable Distribution:
You must be at least 70½ years old at the time you request a QCD. If you process a distribution prior to reaching age 70½, the distribution will be treated as taxable income.

For a QCD to count toward your current year's RMD, the funds must come out of your IRA by your RMD deadline, which is generally December 31 each year.

Funds must be transferred directly from your IRA custodian to PWC. This is accomplished by requesting your IRA custodian issue a check from your IRA payable to PWC. You can then request that the check be mailed to PWC or forward the check to the PWC yourself.

Note: If a distribution check is made payable to you, the distribution would NOT qualify as a QCD and would be treated as taxable income.

The maximum annual distribution amount that can qualify for a QCD is $100,000 in a calendar year. If you’re a joint tax filer, both you and your spouse can make a $100,000 QCD from your own IRAs.

Account types that are eligible for QCDs include:
Traditional IRAs

Inherited IRAs
Roth IRA
(Under certain circumstances, a QCD may be made from a Roth IRA. Roth IRAs are not subject to RMDs during your lifetime, and distributions are generally tax-free. Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation)

Consult a tax advisor to determine if making a QCD from an IRA is appropriate for your situation. Then contact your financial adviser today and request that a Qualified Charitable Distribution be made directly to People Working Cooperatively. 
1 - Identify your gift with your name, address, and intention to use it as an IRA Qualified Charitable Distribution. 


2 - List our name as People Working Cooperatively, our address as 4612 Paddock Road, Cincinnati, OH 45229, and PWC’s EIN number is 31-0859104


Important Notes:

You are not allowed to receive any benefit in return for your charitable donation. For example, if your donation covers your cost of paying for a table at a gala, your gift would not qualify as a QCD.

You can’t give your RMD from a 401K to charity. The tax-free transfer of your RMD to charity only applies to IRAs. Still, there is an indirect way to give money from your 401(k) to charity tax-free. To do this, you will have to roll over money from your 401(k) to an IRA and then donate it to charity.

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