Required Minimum Distributions and Qualified Charitable Distributions

Many of our donors who are over age 70 ½ must take an annual required minimum distribution (RMD) from their tax-advantaged retirement plans before year-end, including a traditional Individual Retirement Account (IRA). Individuals who must take an RMD have the option of taking it as a taxable distribution or as a Qualified Charitable Distribution (QCD). A QCD is a distribution of funds from your IRA custodian payable directly to a qualified charity and it is not paid out as a taxable distribution to you, the IRA owner.

Required Minimum Distribution Distributed Directly to IRA Owner

A RMD distributed directly to you, the IRA owner, does not qualify as a QCD even if you subsequently donate the RMD to a qualified charity. After receipt of the RMD from your financial institution, you may donate the funds to The CCSU Foundation, Inc. in the same manner as you would make any other donation to the Foundation. The donation may be eligible for a tax deduction on your personal income tax return.

Required Minimum Distribution Payable as Qualified Charitable Distribution

A QCD is a direct transfer of funds from your IRA custodian, payable to a qualified charity. A QCD counts toward your RMD from your IRA. Unlike a cash donation to a charitable organization, you do not receive a tax deduction for a QCD from a traditional IRA. Instead, the distribution is not taxable income to you. This may be a beneficial tax planning strategy for you.

If you prefer to have your IRA custodian remit the RMD as a QCD, per IRS guidelines, you must donate the funds directly to an eligible charitable recipient. The CCSU Foundation, Inc. is not an eligible charitable recipient of a QCD. However, Central Connecticut State University is an eligible charitable recipient of a QCD and you may make your QCD directly to the University.

Under certain circumstances, a QCD may be made from a Roth IRA. Roth IRAs are not subject to RMDs during your lifetime, and distributions are generally tax-free. Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation.

Contact your IRA Custodian or tax advisor to learn more and determine if you are eligible to make a QCD to Central Connecticut State University.

The information provided here is not offered as tax or legal advice. Donors and potential donors should consult with a qualified tax advisor regarding their own specific circumstances, the tax and nontax considerations, and consequences associated with the gift described in this document.