IRA Qualified Charitable Distribution passed in the House and is headed to the Senate. Exciting news in Washington today! The House of Representatives passed the PATH Act making the IRA Qualified Charitable Distribution permanent law. Since 2006, taxpayers age 70-1/2 and older with an IRA have been able to take all or part of their minimum distribution of their IRA, up to $100,000, and donate it directly to a nonprofit organization. The amount of the donation or Qualified Charitable Distribution is neither included as income nor a charitable donation on the tax return. Depending on the individual situation, this treatment can be more beneficial than reporting both the income and and charitable deduction. For the past 5 years, Congress has waited until the very end of the tax year to retroactively extend this provision. It will be exciting to see this provision made permanent! The Path Act is now on to the Senate for approval.
Click here to read more about it from the Council on Foundations.
Click here for a recent Wall Street Journal article which outlines some of the benefits of the IRA Qualified Charitable Distribution.
IRA Qualified Charitable Distributions not allowed with Donor-Advised Fund! Please note that the IRA Qualified Charitable Distribution cannot be made to a donor-advised fund (where the donor is able to make grant recommendations in the future as desired). Rather, the donor must designate the nonprofit(s) to receive the funds prior to making the distribution. Donors who are interested in making a Qualified Charitable Distribution from their IRA can however create a designated fund at TCFHR. This may be beneficial if the donor wishes to benefit multiple nonprofits from one distribution and/or wants the distribution to the nonprofit to be made over time and not in one lump sum.