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November 25, 2020Can a parishioner still do a QCD for 2020?
Yes. You can still donate part or all of your Required Minimum Distribution [but can’t exceed $100k].
Will it still offer tax benefits, even though RMDs are not required?
It is possible and you should consult with your tax or financial advisor.
How does a QCD Work?
QCDs allow IRA owners who are age 70 ½ or older to directly transfer up to $100,000 annually from an IRA to the Parish, tax-free. If you are married, you and your spouse may both transfer $100,000 for a total of $200,000. QCDs are also available to IRA beneficiaries over age 70 ½. The important key is that the funds must be paid directly from the IRA to the charity. Another benefit of a QCD is that the amount transferred from the IRA to the charity is not included in your adjusted gross income (AGI) for the year.
What are the potential tax advantages?
The distribution QCD is not included in your AGI. That said, you can potentially avoid the loss of exemptions, deductions, credits and phase-outs, AMT (alternative minimum tax), the 3.8% surtax on net investment income, and the increase in Social Security premiums for Medicare Part B and Part D. This is an area you need to discuss with your tax preparer and/or financial advisor. Also, you may not take a distribution from your IRA and then contribute it to a charity – the funds must be sent directly to the parish from your bank or investment account manager.
If you have any other questions, please contact Alan DeMars at ademars@stcatherinesiena.org or 978-2338 or Linda Reaume at lreaume@stcatherinesiena.org or 978-2346.