• Joseph Ward, CPA and Mary Thomas, CPA

Tax-Advantaged Giving Through IRA Distributions

by Joseph A.G. Ward, CPA and Mary Thomas, CPA

Smyth & Ward, P.A.

Certified Public Accountants

717-235-5525


Over the last several years, there have been many changes in our tax laws dealing with Individual Retirement Accounts (IRAs) and tax deductions. I want to explain a financial choice that could benefit individuals who were born before 1951.

Prior to 2020, individuals were required to take a required minimum distribution (RMD) from their IRAs in the year they reached age 70½. Changes made by the SECURE Act provide that if your 70th birthday is July 1, 2019 or later, you do not have to take withdrawals until you reach age 72.

In March 2020, in response to the pandemic, Congress passed the Coronavirus Aid Relief and Economic Stimulus (CARES) Act. The CARES Act waived the requirement to take RMDs in 2020. This only impacted the distributions in 2020, not in future years.

There has been a law for several years, which was not changed by the CARES Act, allowing an individual age 70½ or older to take a Qualified Charitable Distribution (QCD) up to $100,000 per year from their IRA and have the trustee/custodian of the IRA send the money directly to a charity or various charities. Each spouse must adhere to the requirements in their own IRA since it is an individual retirement account not a joint account. The distribution must go directly from the IRA trustee to the charity. The funds must be used as donation. They cannot be used to buy raffle tickets, golf tournament fees, dance tickets, etc.

Many taxpayers are now taking the standard deduction on their income tax returns as a result of the increased standard deduction under the Tax Cut and Jobs Act of 2018. This means that they are not getting a tax benefit for charitable contributions. The QCD allows the taxpayer to directly offset income from an IRA distribution and reduce taxes.

Example: Bob was born on April 1, 1949. He is married and files a joint return with his spouse using the standard deduction. They receive social security benefits, a pension, and investment income totaling $100,000 per year. In 2021 Bob is required to take a distribution from his IRA of $10,000. They have been contributing $10,000 per year to various charities and wish to donate $10,000 in 2021. The following shows the tax advantage of using a QCD:



The QCD accomplishes their charitable contribution goal and saves them $2,200 in federal income tax.


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