HOT Topic: QCD & MEGA QCD 2021

Qualified Charitible Distributions (QCD) are a great way to satisfy your RMD (required minimum distribution) requirements if you do not otherwise need the money for living expenses and/or if you are currently contributing to a charitible organization.  Normally QCD’s are only available to those over 70 ½ years old, but in 2021 – while anyone can take advantage, best for those over 59 ½.

Quick Review – Required Minimum Distributions (RMD’s):

If you have not ever heard of this term, then it is unlikely you are subject to this rule.  It is an IRS requirement to withdraw (distribute) a minimum amount of monies from your retirement account(s) after age 70 ½ (now 72), and/or earlier in the case of “Inherited IRA’s” (any retirement account you received from someone else).

RMD’s are taxable income, meaning every dollar received gets added to your taxable income each year it is received.

QCD’s are a means to eliminate the tax consequences from these RMD’s.   Rather than receiving the money from your IRA and turning around to write a check to your charitible organization (which may or may not be tax deductible depending upon your situation), a QCD directs the custodian to send your money directly to the charity – payable to them and avoids any taxable consequence to you, and satisfies the IRS RMD requirement. 

The normal limits for QCD’s are $100,000 per year, and normally not allowed from Company Plans (i.e. 401k’s) but in 2021 there is a way around these limitations too! 

If you are already funding a favorite charity or have been thinking of doing so, and you have a retirement account – a QCD may be right for you.  Congress suspended many of the normal rules encompassing QCD’s and RMD’s in 2020, but 2021 normal RMD rules are again in force while QCD rule suspensions carry on until the end of 2021 – making 2021 an exceptional year that you might benefit from.

Talk to your tax professional or give me a call to see if a QCD in 2021 might be right for you!

 Pete Thoresen


Securities offered through Royal Alliance Associates Inc., member FINRA/SIPC. Investment advisory services offered through Focus Financial Network, Inc., a registered investment advisor not affiliated with Royal Alliance Associates, Inc.  /  1000 Shelard Parkway, Suite 300, Minneapolis, MN  55426