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‘Tis the season for charitable giving. Nearly one-third of charitable giving occurs in December, as Americans close out the books on the year and dash to meet the Dec. 31 deadline for making tax-deductible charitable donations.

Americans who own IRAs have a unique opportunity to make their annual charitable donations with their retirement account by choosing to make a qualified charitable distribution (QCD). QCDs — which are also referred to as IRA charitable rollovers — enable IRA owners who are 70½ or older to directly transfer the lessor of their RMD amount or up to $100,000 of IRA assets every year to an eligible charity.

Qualified charitable distributions can have multiple benefits for IRA holders. Not only do they allow an IRA owner to support charitable causes, but they also may provide IRA owners with a tax break because they may be able to fulfill or partially fulfill an an IRA owner’s annual required minimum distribution (RMD).

Starting at the age of 70½, individuals who own a Traditional, SEP, or SIMPLE IRA are required to remove a portion of assets from their IRAs each year as a distribution, and these required minimum distributions typically are taxed as ordinary income. But when an IRA holder makes a QCD, that distribution is not included as taxable income, which may lower an individual's annual tax burden.

IRA owners who choose to make a QCD must be sure they understand the rules and implications of these distributions:

• To make a QCD, you must be 70½ or older.
• You can donate up to $100,000 to one or more charities.
• Each spouse in a married couple can make a QCD up to $100,000.
• A QCD must be paid directly from the IRA to the charity. As an IRA owner, you must instruct your IRA custodian to transfer the funds directly from the IRA to the charity. If a check is made out to you, it may be considered a distribution and you may face a taxable event.
• For a QCD to count as your RMD, it must be withdrawn from your IRA by the end of the year.
• To get appropriate credit for making your QCD, it must be donated to a charitable organization that accepts tax-deductible contributions — a 501(c) exempt entity.
• Not all charities are eligible to receive QCDs. These include private foundations and donor-advised funds.
• You cannot personally benefit in any way from a qualified charitable distribution. 
• If you donate to a charity using a QCD, the payment cannot also be deducted as a charitable contribution.

Given the logistics involved in making qualified charitable distributions, you should consult with a tax or financial advisor who can help you determine if making a QCD is in your best interest.

The IRS deadline to make a 2019 qualified charitable distribution with your Pacific Premier Trust IRA is 12/31/19. If you decide to make a QCD with your Pacific Premier Trust IRA, here are the steps you need to complete:

• Fill out the following form: IRA Distribution Request Form 
• Pacific Premier Trust would like to receive your QCD request by 12/16/19 to process submissions in time; the IRS will not allow any extensions. You can submit the form and letter of instruction to Pacific Premier Trust in two ways:

1) You can upload the form online

OR

2) You can fax the form to 303.614.7096

If you have questions on qualified charitable distributions or required minimum distributions, please call us at 800.962.4238.

Editor’s Note: This is an updated version of a post we originally published in 2018. 

This Blog does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Investments are not FDIC insured and are subject to risk, including the loss of principal.

Pacific Premier Trust (formerly PENSCO Trust Company) performs the duties of an independent custodian of assets for self-directed individual and business retirement accounts and does not provide investment advice, sell investments or offer any tax or legal advice. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity as well as selecting any professional to assist them with an investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. Pacific Premier Trust is not affiliated with any financial professional, investment, investment sponsor, or investment, tax or legal advisor.

NOT FDIC-INSURED | NO BANK GUARANTEE | MAY LOSE VALUE