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Personal Finance

A Guide to Qualified Charitable Distributions

Who can do these beneficial transfers, with how much money, to what kinds of charities--and how to execute (and report) the QCD.

Some IRA owners can legally transfer money directly from their IRAs to charity, either in fulfillment of their required minimum distribution (RMD) or otherwise. Investors need to know who can do this with how much money, which kinds of charities qualify, how to do (and how to report) the transfers, and the benefits of this type of transfer.

Which retirement plans: Qualified charitable distributions (QCDs) may be made from traditional IRAs, other than SEP-IRAs and SIMPLE plans that are actively receiving employer contributions. QCDs can theoretically be made from Roth IRAs, but the requirement that the distribution must come from funds that otherwise would be included in the IRA owner's gross income (if distributed to him or her) precludes most Roth IRAs. QCDs may not be made from 403(b) or 401(k) plans or any other type of retirement plan other than IRAs.