IRA "Qualified Charitable Distribution"
Learn more about how a Qualified Charitable Distribution (QCD) can benefit you and your community!
For many of us, being generous with our money is one of the great joys in life. And it turns out that being generous with your IRA can be both personally satisfying and provide tax benefits.
If you are fortunate enough that you do not need all of the funds from your IRA, we're here to help develop a distribution plan.
When you reach the age of 70 1/2 you can reduce your taxes and make an impact through the Heart of Illinois Community Foundation with a qualified charitable distribution (QCD).
A QCD can be made that meets your required minimum distribution (RMD) - where annual withdrawals are mandatory. Using a QCD for your charitable giving may allow you to take the higher standard deduction while also reducing your taxable income. Qualified charitable distributions (QCD) allow you to instruct your IRA administrator to direct your RMD (up to $100,000 per year) to qualified 501(c)(3) charities (donor advised funds do not qualify). Since the IRA distribution is sent directly to the charity through your administrator, the QCD is not reported as taxable income. This is a win-win option for donors who want to support nonprofits in a tax advantaged way!
Although Donor Advised Funds are not eligible to receive QCDs per IRS guidelines, the Heart of Illinois Community Foundation has several alternatives donors can consider.
The following types of funds are eligible to receive QCDs from IRAs:
Programs and Services is supporting the work of the Heart of Illinois Community Foundation through our operations. By supporting our work, you help us continue to make bold investments in people and place, bringing like-minded donors together to build our best community.
Designated Funds support the good work of specific nonprofit organizations. We have funds for over 95 local nonprofit organizations. Designated funds are a particularly good choice for clients who prefer to support the same charities every year. These funds streamline the giving process by automatically awarding annual grants to one or more charities selected by the donor.
Field of Interest Funds support broad areas of need and award grants to the community organizations and programs addressing this such as:
- Arts & Culture
- Community Development
- Conservation/Environment
- Early Education/Childcare
- Education
- Financial Literacy
- Food Insecurity
- Work Force Development
- Youth Development
Scholarships support education and you can establish a scholarship fund to receive your distribution. You set the award criteria and a selection committee chooses the scholarship recipients. We promote the scholarship opportunity, accept applications, verify students' eligibility and process scholarship payments. The minimum amount required to open a scholarship fund is $20,000.
Contributing to our Adult Scholarship Program helps nontraditional students toward successful completion of their degree.
Contributing to our Racial Equity Fund financially supports nonprofit organizations directly addressing the challenge of racism and inequity in our area.
Or ask us about establishing a new charitable fund on your behalf!
Click here for a graphic with more details about how it works.
The Process is Simple
1. Choose your gift amount and how you would like your gift to be used.
2. Ask your plan administrator to direct your IRA distribution to the Heart of Illinois Community Foundation.
Do You Qualify?
- Donors must be 70 1/2 or older on the date of the distribution to a fund at the Community Foundation
- Your plan administrator must transfer the funds directly to the Heart of Illinois Community Foundation.
- Your gift cannot be directed to a donor advised fund.
- Distribution must be received by the deadline to be counted in the current tax year. Check with your financial advisor for complete details.
- Qualified Charitable Distributions are limited to $100,000 per individual in total during each year. For married couples, each spouse can make QCDs up to the $100,000 limit for a potential total of $200,000.
Benefits
- All QCD gifts can be used to satisfy your IRA required minimum distribution.
- Your QCD gift goes directly to the Heart of Illinois Community Foundation and is not subject to federal income tax.
For more information contact: Missy Batman, HICF Vice President at mbatman@heartofillinois.org, 217-429-3000.
