Why do this?
- You may be able to avoid taxes on otherwise taxable distributions if you're drawing from a traditional IRA.
- A qualified charitable distribution (QCD) is not subject to ordinary federal income taxes – the amount is simply excluded from your taxable income. In general, QCDs must be reduced by deductible IRA contributions made for the year you reach age 70½ or later. If you've made deductible IRA contributions for the year you turn 70½ or later, consult a qualified tax advisor prior to taking a QCD to determine the amount by which your QCD must be reduced.
- Your annual Required Minimum Distribution (RMD) may be donated to a qualified charity.