November is Philanthropy Month, which seems appropriate as the holidays approach and people’s minds turn to giving. From a financial planning standpoint, charitable donations can offer tax advantages as well. However, one such advantage is set to expire at the end of this year.
Current Qualified Charitable Distribution (QCD) rules allow taxpayers to make IRA distributions up to $100,000 directly to a qualified charity without incurring taxes on the income. Such distributions also count toward the IRA owner’s Required Minimum Distribution. These rules were extended at the end of 2010 but are scheduled to sunset on December 31 of this year.
There are several restrictions on such donations, most notably that you must be 70½ or older as of the date of the distribution.
If you were planning to give to a charitable cause this year and need to satisfy your required minimum distribution, you should consult your financial advisor and tax professional about this opportunity.