Qualified Charitable Distributions

If you are age 70.5 or older and have an Individual Retirement Account (IRA), you can put your savings to work supporting UU Church of Studio City - and get a tax break - with a Qualified Charitable Distribution. 

FAQs

What is a Qualified Charitable Distribution (QCD)?

A Qualified Charitable Distribution (QCD) is a gift given to a charity directly from an Individual Retirement Account (IRA). It  provides an opportunity for IRA owners to share a lifetime of savings while also reducing their adjusted gross income.

With proper planning, a QCD can be a “win-win,” as a possible tax break both for you and for UU Church of Studio City. 

What is an Individual Retirement Account (IRA)?

An IRA is a retirement savings account that allows individuals to save money for retirement with tax benefits. Contributions to traditional IRAs are often tax-deductible, and the earnings grow tax-deferred until withdrawal. 

So that tax-deferred retirement savings are not accumulated indefinitely, after age 73 the IRS mandates that the IRA owner withdraw a specified percentage of money from their traditional IRA and pay income tax on it.

Required IRA withdrawals are known as Required Minimum Distributions (RMDs).  

What is a Required Minimum Distribution (RMD)?

RMDs are the minimum amounts that must be withdrawn from traditional IRAs each year starting at age 73. If you don't take the required distributions, you may face a penalty. RMDs are generally taxed as ordinary income. 

However, an IRA owner may choose to comply with the withdrawal requirement by making a QCD directly to a qualified charity. A withdrawal up to a specified maximum amount ($108,000 in 2025) will not be counted as income to the IRA owner, and therefore it will not be taxed.

What is the difference between a QCD and an RMD?

They are not the same, but they are related. A QCD can be made to satisfy an RMD. 

Everyone must start taking Required Minimum Distributions ("RMDs") from their qualified retirement plans, including IRAs, when they reach the age of 73. RMDs are taxable income.

The Qualified Charitable Distribution (QCD), by contrast, is a distribution directly from certain types of qualified retirement plans (including IRAs) to certain types of charities. When a taxpayer follows the rules, a QCD can count toward the taxpayer's RMD for that year. And because the QCD goes directly to charity, the taxpayer is not taxed on that distribution.      

Age 70.5? Age 73? What’s the difference?

Good question! Besides about 21 months, there’s a difference when it comes to RMDs. 

Before President Trump’s Tax Cuts & Jobs Act of 2017 passed, the minimum age to take RMDs and QCDs was the same:  70.5 years.

The Tax Cuts & Jobs Act of 2017 pushed the RMD age to 73, but it did not change the age to make QCDs. It’s still 70.5.

Even though a 70.5-year-old IRA owner is not required to take a minimum distribution, s/he can still take a Qualified Charitable Distribution without the withdrawal counting as income and being taxed. 

How do I make a Qualified Charitable Distribution?

1. Contact Your IRA Custodian: Inform your IRA custodian - the financial institution that holds and manages your IRA - of your intention to make a QCD and the amount you wish to donate.
   
   

2. Initiate the Transfer: Your IRA custodian will handle the direct transfer of funds from your IRA to the charity. They should NOT send the funds to you. . If they do, the withdrawal will not count as a QCD.
   
   

3. Confirm the Transfer: Ensure that the funds are transferred directly to the charity and not to you.
   
   

4. Report on Your Tax Return: You will need to report the amount of your QCD on your federal income tax return separate from any other withdrawals you make. Your IRA custodian will send a 1099-R reporting ALL the withdrawals you made, including non-taxable withdrawals (QCDs). To take advantage of the tax break, you need to report on your tax return the amount of the non-taxable withdrawals (QCDs) you made. Your IRA custodian isn’t responsible for this.
   
   

5. Keep Records: Keep records of the QCDs to UU Church of Studio City, including the amounts donated. Also, keep the acknowledgements you receive in your records. Unacknowledged QCDs are subject to taxation as ordinary income.
   
   

6. Notify UU Church of Studio City of the gift:
   By notifying us, you make us aware that a donation is on the way. You also help us properly record and acknowledge your gift, and ensure you receive the necessary documentation for tax purposes.
   
   

7. Be Informed about Custodian Procedures:
   Most custodians will send a QCD distribution check directly to the charity. If a custodian inadvertently sends a QCD check (payable to the charity) to the IRA owner - to you -  then simply forward it to the charity promptly. Knowing the custodian's procedures can help you ensure the check is properly routed and the charity receives it.
   
   

8. Tax Preparation:
   It's important to inform your tax preparer about your QCDs so they can properly report it on your tax return. 

Bottom line, if you have a qualified retirement plan (such as an IRA) and are age 70.5 or older, you can contribute to our mission from your IRA and reduce your taxable income simultaneously.

Make a Qualified Charitable Distribution today to:

Unitarian Universalist Church of Studio City

Attn: Stewardship Committee

12355 Moorpark Street 

Studio City, CA 91604

The Unitarian Universalist Church of Studio City is a 501(c)(3) registered nonprofit, EIN 95-2705051. 

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.