Menu Phi Beta Kappa PBK Northern California Association Honor Society
PBK Key logo

As the end of the year approaches, some of our members have asked for more information on QCD’s, RMD’s and Donor Advised Funds and what this all means.

A QCD is a Qualified Charitable Distribution. According to Fidelity Investments “a QCD is a direct transfer of funds from your IRA custodian, payable to a qualified charity.... In addition to the benefits of giving to charity, a QCD excludes the amount donated from your taxable income, which is unlike regular withdrawals from an IRA which are generally taxed.”

 

There are some requirements for QCD’s. A few examples are:

QCD's must be made on or after the date the IRA beneficiary turns 70 1/2.

The donation may not be made from a donor advised fund (DAF) since the donor has already received the tax benefit.

The distribution must come directly from your IRA trustee (financial institution) to the qualified charitable organization, you cannot receive the funds then pay it to the charity.

The donor may not receive any goods or services for their donation.

The donation must be made to a qualified charitable organization. PBKNCA is a qualified charitable organization.

 

Also, we must be able to process the donation within the calendar year, which means that last minute donations just before the end of the year won’t get this special treatment, so be sure to make your donation no later than December 1st.

 

The check should be sent to:

Ms. Patricia Kenber VP Membership, ΦBKNCA, 1073 River Rock Lane, Danville CA 94526-4001

 

The RMD is the Required Minimum Distribution. The IRS states “You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age70½.” Your required minimum distribution is the minimum amount you must withdraw from your account each year.  For most people, this amount is added to your taxable adjusted gross income. By making a charitable contribution (QCD) from your required minimum distribution (RMD) to a qualified charity like PBKNCA you will not only do meaningful philanthropy, but lower your adjusted gross income.

 

A Donor-Advised Fund (DAF) is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a donor-advised fund at a public charity, like for example Fidelity or Schwab Charitable, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity. This is not the same as a QCD.

 

Although the PBKNCA cannot and does not offer financial advice, if these vehicles sound like something that fits your philanthropic needs, please contact your financial advisor or institution for further details.