• Your donation can be made by a check sent directly to the charity by your account custodian, or you can have the check made out to the charity and sent to you, so you can give it to the charity. The important point is that the check must be made out to the charity. If it is made out to you, it will be a taxable RMD, and will not be considered a QCD. That is the case even if you immediately endorse it over to the charity. Ideally, the charity should cash the check by December 31st, which means you should make the distribution by mid-December or earlier. You should ask the charity for a letter acknowledging your gift.
• Be sure to inform your tax preparer that you made a QCD from your IRA. Otherwise, the preparer may see the 1099-R form provided by your IRA custodian and assume the funds withdrawn were a regular RMD, and thus are taxable income.
There are some additional restrictions to keep in mind. The election is irrevocable. Similarly, once an annual distribution for a tax year is received, the funds cannot be returned to your IRA account and subsequently taken out as a QCD.
Furthermore, QCD cannot be directed to a private foundation, donor-advised fund, charitable remainder trust, charitable lead trust, charitable gift annuity or similar giving vehicle. But, as Mr. Menashe did, it can be used to establish an endowment, which creates a perpetual flow of funds to a favorite charity or cause.
In addition, receiving any goods or services of value in return for your gift—such as tickets to a fundraising dinner or other event—is not permissible.
Remember that your QCD donation can go to a single charity, or to several. You can use up to the $100,000 annual cap. You cannot “roll over” a QCD; if you donate an amount above your required minimum distribution, the excess does not count toward next year’s RMD.
Steve Gamer is vice president of advancement for the Jewish Community Foundation of Los Angeles, which manages more than $1 billion in charitable assets entrusted to it by 1,300 families seeking to magnify the impact of their giving. The Foundation distributed $115 million in grants in 2018 to causes locally, nationally and around the world.