qualified charitable distribution (QCD)

If you are age 70½ or older, IRS rules require you to take required minimum distributions (RMDs) each year from your tax-deferred retirement accounts. This additional taxable income may push you into a higher tax bracket and may also reduce your eligibility for certain tax credits and deductions. To eliminate or reduce the impact of RMD income,you may want to consider making a qualified charitable distribution (QCD) to Saraswat Foundation.

You can initiate a direct transfer of funds from an IRA custodian, payable to Saraswat Foundation, designated a qualified charity, as described in the QCD provision in the Internal Revenue Code.

Amounts distributed as a QCD can be counted toward satisfying your RMD for the year, up to $100,000, and can also be excluded from your taxable income. After the tax code was revised couple of years ago, there are sever upper limits on the max. deductions, while increased standard deduction. QCD can be taken even if you use standard deduction. 

Why is this distinction important? If you take the RMD as income, instead of as a QCD, your RMD will count as taxable income. Having higher taxable income can directly impact your eligibility for certain deductions and credits. For example, your taxable income helps determine the amount of your Social Security benefits that are subject to taxes. Keeping your taxable income level lower may also help reduce your potential exposure to the Medicare surtax.