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  • Writer's pictureJCF

IRA Qualified Charitable Distributions: Act Now, Save on Taxes

(Note: The following column will also appear in the February 23, 2022 issue of the Jewish Community Voice. Due to the timely nature of the topic, however, the JCF wants to share this information more quickly in case it may help you with your financial and charitable planning.)

Do you donate to nonprofits such as the Jewish Federation of Southern New Jersey, and/or do you have an interest in building an endowment fund?

Are you 72 years young or older?

Do you have an individual retirement account (IRA)?

If you answered “yes” to these three questions, keep reading, or feel free to share this column with other loved ones who may meet these criteria.

The goal of this column is to provide insights on how an IRA qualified charitable distribution (also known as a QCD, or an IRA charitable rollover) is an important giving vehicle that allows you to give back to the community and, if properly initiated, earns you key tax benefits. But first, a brief charitable giving primer:

When you donate cash to charity, you are eligible to take a charitable giving deduction if you itemize your taxes. Most people no longer itemize, however, due to the high standard deduction.

So, it can make great sense (and cents) to donate non-cash gifts. By donating appreciated stock, for example, that you’ve held for 365+ days, you avoid paying capital gains taxes, while also earning a charitable deduction on the fair market value of the gift.

Now, consider your IRA. When you originally contributed to your IRA, you may have claimed a deduction on your federal income tax return, which was helpful at the time. However, once you reach the age of 72, you must start taking required minimum distributions (RMDs), as set by an IRS formula. Distributions from your IRA are considered income, and you are responsible for subsequent income taxes.

But… if you give charitably to the Federation or other Jewish or secular nonprofits, consider a QCD from your IRA, instead of gifting cash. Here’s how it works and why it’s an important benefit for you:

By instructing your IRA broker to send a QCD directly from your account to a 501(c)(3) nonprofit (or synagogue), your broker will process a check to the charity, instead of to you. This helps you avoid getting hit with an income tax bill, and because it counts towards your RMD.

So, if your RMD for the year is $10,000 and you send a QCD of $4,000 directly to charity, you are reducing your RMD to the $6,000 that remains. (Each year, you may distribute up to $100,000 via QCDs from your IRA and have it count towards your RMD.)

But plan carefully! Here’s a critical note from

If the RMD (i.e. income) is taken before the QCD (i.e. donation),

“it will be taxable, and it cannot be offset with a QCD done later in the year. That’s why… when it comes to making charitable gifts, January is the new December. Most people tend to do their giving in December at holiday time, but by then it may be too late to gain the tax benefit of offsetting RMD income, due to what’s known as the ‘first dollars out rule.’”

In short, initiate a QCD first before taking any RMD for yourself to earn the tax benefit.

Another important consideration is that your QCD can go into an endowment fund with the Jewish Community Foundation, Inc. This is a savvy way to create a legacy during your lifetime. (Per IRS rules, a QCD cannot go to a donor advised fund. Additionally, this article offers a glimpse at a unique charitable giving strategy; the JCF does not provide tax advice, please consult with your trusted advisor accordingly.)

To discuss creating a legacy through a QCD to the JCF, contact us at 856-673-2528 or We welcome the chance to help you support future generations.


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