A RETIREE’s Alternative to Pledging: Qualified Charitable Donations from Your Retirement Account

by Dave Schowalter & Moira Rouse, Stewardship Team

Some members contribute financially to UUCW directly from a retirement account instead of making a traditional pledge. If you have an Individual Retirement Account (IRA) and are over 72 years old, you have a unique opportunity to contribute to UUCW through a Qualified Charitable Distribution (QCD). This article explains what a QCD is, how it works, and the advantages of making such a donation.  

What is a Qualified Charitable Distribution (QCD)?

A Qualified Charitable Distribution is a direct transfer of funds from your IRA to a qualified charitable organization. QCDs can count toward your annual Required Minimum Distribution (RMD), which means they are not subject to income tax.

Can I contribute to UUCW from a 401k using a QCD?

No, QCD’s are only allowed from IRA’s, not from 401k plans.  You can, however, “roll over” money from a 401k into a traditional IRA when you change jobs or retire. There are no tax consequences to a qualified “Rollover” into a traditional IRA. If you do, then this QCD option is available from your traditional IRA. 

Are QCD’s also available from a Roth IRA?

Yes, though they may not be as beneficial as QCD’s from a traditional IRA.  This is because Roth IRA’s are not subject to RMD.  Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation. 

How do I Make a QCD to UUCW?

In 3 easy steps that begin with Contacting Your IRA Custodian/financial institution!

  • Determine Your Eligibility: There are age requirements associated with the RMD and QCD eligibility (usually either age 72 or 75), depending on your birth year.
  • Select UUCW as Your Charitable Recipient and decide on the amount. An annual QCD can be as much as $100,000 per person, meaning a couple filing jointly can donate up to $200,000 in a single tax year.  You can change the QCD amount each year if you want -you have complete control- just notify the financial institution.
  • Your IRA Custodian will guide you through their particular process and provide the necessary forms for a QCD. You will specify the amount and select UUCW as the recipient. Then funds will be directly transferred to the church!

Benefits of Making a QCD

Decrease Your Taxes: The primary advantage of a QCD is that the amount you donate is not included as taxable income. This is especially beneficial if you are subject to higher tax rates.

Meets RMD Requirements: Once you are 70.5 or older and have a traditional IRA, you are required to receive a Distribution every year. QCDs can satisfy this requirement and reduce your taxable income.

Support UUCW: Making a QCD to the Unitarian Universalist Church of Worcester allows you to contribute to a cause you are passionate about while also reducing your tax liability.

Simplified Giving: QCDs provide a straightforward way to give to the church directly from your retirement account without the additional process of claiming deductions on your tax return.

Reduce Medicare Premiums: If you lower your taxable income by making QCDs, this can also reduce your Medicare Part B and Part D premium amounts, which are based on income.

Conclusion: Qualified Charitable Distributions offer a win-win scenario for older members who want to support charitable causes and minimize their tax liability. By contributing to UUCW and other qualified charitable organizations, you can make a meaningful impact on your community while enjoying tax advantages. Before initiating a QCD, consult with your financial advisor or tax professional to ensure that you meet all the eligibility criteria and understand the implications for your unique financial situation. In doing so, you can optimize your charitable giving and support UUCW in all we do!

The Stewardship Team:

Moira Rouse
Dave Schowalter

*Note:  For listing UUCW as your Charitable Recipient, remember to use our new address (140 Shore Drive, Worcester, MA 01606, and please contact us () to get our Tax ID (EIN).