A qualified charitable distribution is one that is not taxable. For 2017 and going forward, these distributions are an option for IRA owners age 70 ½ and up. If an individual instructs his or her IRA to make a distribution directly to a qualified charity, that amount can be deducted from the required minimum distribution (RMD) for the year.
For example, if your RMD is $10,000, and you direct $7,000 to be paid out to a qualified charity, you need only withdraw (and pay taxes on) an additional $3,000 to meet your RMD quota for the year. Note, too, that the amount you contribute to a charity from an RMD cannot be claimed as a charitable deduction on your tax return.
This hypothetical example is for illustrative purposes only. This information is not intended to provide tax advice. Contact us at email@example.com or call us at (952) 460-3260 to schedule a time to discuss your financial strategy.