Qualified charitable distribution
A qualified charitable distribution, or QCD, is a distribution from an individual retirement account paid directly by the IRA trustee to an eligible charitable organization. Official guidance describes it as nontaxable. Practitioners describe conditions involving the IRA holder's age and direct payment, and explains how a QCD relates to a required minimum distribution.
How it works
A QCD moves from the IRA directly to an eligible charitable organization. The IRA owner does not receive the money first and then contribute it.
Practitioners describe an age condition of 70-and-a-half on the distribution date. The same practitioners say a QCD can count toward an individual's required minimum distribution and is excluded from gross income, without producing a charitable deduction.
Where it shows up for owners of businesses, real estate and private investments
A QCD concerns an individual retirement account, so its connection to an operating business, real estate holding or private investment is the owner's retirement account. The distribution itself is paid from the IRA to the charitable organization.
Estate planning practitioners describe qualified charities as potential recipients and says donor-advised funds, private foundations and supporting organizations do not qualify. Official guidance describes the recipient condition as eligibility to receive tax-deductible contributions.
Points that are easy to confuse
A QCD and a charitable contribution made after an IRA withdrawal have different payment paths. A direct trustee payment is part of the QCD description, while an owner who receives the money first and contributes it afterward has not followed that direct-payment condition.
A QCD's treatment as excluded from gross income does not mean it also produces a charitable deduction.
Common questions
Does a QCD count toward a required minimum distribution?
Practitioners say a QCD can count toward an individual's required minimum distribution.
Can the IRA owner receive the money before donating it?
No. A direct payment from the IRA to the charitable organization is part of the QCD description.