For our members now taking Required Minimum Distributions (RMD’s) from their IRA’s please be advised that Congress has extended the Qualified Charitable Distribution (QCD) law with no expiration date. This extension of the law allows traditional IRA owners age 70 ½ and older to avoid tax on transfers made directly from their IRA to an eligible charity, such as the NSRWA, up to a $100,000 limit. A QCD counts towards the required minimum distribution that one must otherwise receive from one’s IRA for the year.
OCD’s offer advantages over taking a taxable IRA distribution and then taking the proceeds of that distribution to a charity. Taxable IRA distributions must be included in Adjusted Gross Income (AGI) which may have an adverse effect on the taxpayer. Also, in order to take a charitable deduction one has to itemize deductions, which not everyone does. In addition, no Massachusetts state tax is due when a QCD is made, whereas a direct distribution from an IRA would be taxable even if a charitable donation is made, since Massachusetts does not allow charitable deductions. Finally, one cannot claim a charitable deduction for the QCD, which is not included income.