How to make a Qualified Charitable Distribution (QCD) from a retirement account
Donating part or all of your unused retirement assets, such as your individual retirement account (IRA), 401(k), 403(b), pension or life insurance plan, is an excellent way to make a gift to charity, such as St. Jude Children's Research Hospital. Because charities do not pay income taxes on the donations they receive, distributions to charities will avoid being taxed as income. Your gift helps ensure families never receive a bill from St. Jude for treatment, travel, housing or food — because all a family should worry about is helping their child live.
How a QCD works
If you are over age 70½, you may give a gift from your IRA as a tax-free distribution to a qualified charity. This means an amount (up to $100,000 annually) transferred from your IRA directly to St. Jude can count toward your required minimum distribution without being considered taxable income for you. The distribution, also known as an IRA Charitable Rollover, is authorized by Section 408(d)(8) of the Internal Revenue Code. As always, please consult your advisor to determine if this type of gift is right for you.
An IRA gift to charity can count toward your required minimum distribution
A donation transferred directly from your IRA to St. Jude, or another qualified charity, is not considered taxable income on your federal income tax return, but it does count toward your required minimum distribution.
Ensure your charity of choice qualifies
A charity must be a 501(c)(3) organization, such as St. Jude. You can designate one charity as the sole beneficiary, or you can choose multiple beneficiaries, of the remaining assets. A tax advisor can help you determine if both your IRA and preferential charity qualify for QCDs.
How to get started
You can contact your IRA administrator and ask them to make a QCD. Download a sample Letter of Instruction to get started gifting to St. Jude.
Robert and Arline Thompson have supported a variety of charities in different ways for all their adult lives. Their current preference is supporting St. Jude through their individual retirement accounts (IRAs), which, they say, is “a simple way to give.” Funds transferred directly from a qualified IRA to charity count toward the minimum required distribution, offering potential tax benefits to donors.
The Virginia couple have been fans of St. Jude founder Danny Thomas and his daughter, Marlo Thomas, and they have supported St. Jude for many years. “We appreciate its activities toward the cure and eventual elimination of childhood cancer,” Robert says. As strong supporters of the hospital’s mission, the Thompsons want to ensure that their gifts have the greatest possible impact.
“The main reason we appreciate the qualified charitable distribution (QCD) is because it amplifies our ability to help a charity,” explains Robert, because the qualified withdrawal is not taxable. Both Robert and Arline came from humble beginnings, but through hard work they advanced their careers and eventually founded and ran several businesses together in the field of fiber optics and cable technology.
After selling their last business, they traveled the country, visiting the 49 continental states and most of Canada. The Thompsons enjoy visiting their children and grandchildren, and they are proud to be able to make a difference for the children of St. Jude.
Your support ensures that families never receive a bill from St. Jude for treatment, travel, housing or food — because all a family should worry about is helping their child live.
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