In order to qualify, the following rules must be met.
- The individual taking the QCD must be age 70 ½.
- The maximum allowed QCD is $100,000 per individual, annually.
- The QCD must come from an IRA. QCDs from 401(k)s, 403(b)s, 457(b)s, SEPs, SIMPLEs are not permitted. An individual may roll over an amount to their IRA and then made the QCD.
- The QCD is counted toward the individual’s RMD for the tax year. If the RMD was already taken, the QCD cannot be retroactively made.
- The QCD must be made directly to the charitable organization.
- Generally, the charity must be a public charity.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 made allowing QCDs from IRAs permanent. The tax benefit from this distribution is that the individual is not allowed to take a charitable deduction for the gift to the charity; however, the distribution is not taxed as income to the individual.