To qualify
- You must be 70½ or older at the time of the gift.
- Distributions must be made directly from a traditional IRA account by your IRA administrator to the AMA Foundation.
- Gifts must be outright, meaning they go directly to the AMA Foundation. Distributions to donor-advised funds or life-income arrangements such as charitable remainder trusts and charitable gift annuities do not qualify.
- Gifts from 401k, 403b, and other plans do not qualify.
Tax Benefits
- IRA Qualified Charitable Distributions are excluded as gross income for federal income tax purposes on your IRS Form 1040.
- The gift counts toward your required minimum distribution (RMD) for the year in which you made the gift.
- You could avoid a higher tax bracket that might otherwise result from adding an RMD to your income.
FAQ
What’s the IRS Rule?
The QCD allows individuals 70½ and older to make direct distributions up to $100,000 per year to 501(c)(3) charities without having to count the distributions as income for federal income tax purposes. No charitable deduction may be taken, but distributions will qualify for all or part of the IRA owner’s required minimum distributions.
Who qualifies?
Individuals 70½ or older at the time of the contribution (you have to wait until 6 months after your 70th birthday to make the transfer).
How much can I distribute?
$100,000 per year. The distribution must be outright to charity.
From what accounts can I make transfers?
Distributions must come from your IRAs directly. If you wish to help us with a gift from another retirement asset such as a 401k, 403b, etc., you must first roll those funds into an IRA. Then you can direct the IRA administrator to distribute the funds from the IRA directly.
How will AMA Foundation count the gift?
We will give you full credit for the entire gift amount. You will receive a letter, which states that the gift qualifies as a QCD to use for tax reporting purposes.
What are the tax implications to me?
- Federal — You do not recognize the distribution as income, provided it goes directly from the IRA administrator to us. Therefore, you are not entitled to an income tax charitable deduction for your gift.
- State — Each state has different laws, so you will need to consult with your own advisors. Some states have a state income tax and will include this distribution as income. Within those states, some will allow for a state income tax charitable deduction and others will not. Other states base their income tax on the federal income or federal tax paid. Some states have no income tax at all.
Does this transfer qualify as my required minimum distribution?
Yes. Once you reach 72, you are required to take required minimum distributions from your retirement plans each year according to a federal formula. QCDs count toward your minimum required distribution for the year in which you make the gift.
Can my spouse also make a Qualified Charitable Distribution?
Yes, every individual who is the owner of a traditional IRA can use the Qualified Charitable Distribution for up to $100,000 each year.
What is the procedure to execute a QCD?
Contact your plan administrator and inform them you would like to make a QCD to the American Medical Association Foundation. Be sure to let them know this gift must be sent prior to December 31 to qualify as a charitable distribution for the tax year. We also ask you to contact us when you direct the distribution so we can look for the check from your IRA administrator.
