Support Seeds with a Distribution From Your Retirement Account

Americans who are 70 ½ or older are required to take a minimum distribution each year from their Individual Retirement Account (IRA), which can be given to a charity.  A qualified charitable distribution (QCD) is a direct transfer of funds from your IRA to Seeds of South Sudan.  Done correctly, this donation is excluded  from your taxable income, up to a limit of $108,000 per year.

Support Seeds with a Distribution From Your Retirement AccountThe  rules are:

  1. you must be at least age 70-1/2,
  2. the QCD must be made only from an IRA, and
  3. the distribution must be transferred directly from the IRA custodian to Seeds of South Sudan (the custodian must transfer funds directly to Seeds—do not have the withdrawal sent to you).
  4. The distribution is reported on IRS Form 1099-R, and
  5. you must ensure that the amount of the distribution is reflected as a QCD on your federal tax return (see the instructions on Form 1040).  Your tax advisor can help ensure these requirements are met.

To make a QCD to Seeds, contact your IRA custodian (downloading a form on the custodian’s website, or contacting customer service people) to find out what dollar amount you need to withdraw  (or the amount you wish to donate). Complete the transfer form and obtain confirmation from the custodian that it is acceptable, then report the distribution on your next federal tax return and indicate the amount that was sent to Seeds as a QCD (your tax advisor can ensure that reporting is done correctly).  Please note that the deadline for making a QCD is December 31 for every tax year.

For example, consider Sally, age 75, who has a traditional IRA and is required to take an RMD of $5000 this year.  She doesn’t need the funds for expenses and wants to support Seeds.  She arranges for her IRA custodian to transfer the $5000 RMD to Seeds as a QCD.  On her tax return filed next year, the $5000 QCD is excluded from her taxable income, reducing her tax liability, and Seeds is delighted to receive the donation.

The Qualified Charitable Distribution (QCD) is a powerful tool for retirees wanting to combine financial planning with philanthropy.  By sending IRA withdrawals directly from the IRA custodian to Seeds of South Sudan, you can meet IRS requirements, reduce your taxable income, and make a substantial impact on the Seeds mission.  Careful planning and timely coordination with your IRA custodian and tax advisor are essential to ensure that the distribution is made properly and you receive the maximum benefit.  If you review IRS rules, confirm your eligibility, and consult with qualified professionals, you can be assured that your donation to Seeds is both financially wise and personally satisfying.  Questions can be sent to denton@seedsofsouthsudan.org or by leaving a message at 720-644-6662.