A qualified charitable distribution is a direct transfer from an IRA to an eligible charity that is excluded from taxable income. It allows an IRA owner age 70½ or older to give to charity without first taking the money as personal income. The transfer can start before required minimum distributions begin at age 73. The IRS notes in its November 2022 reminder to IRA owners that owners age 70½ or older can use this option even in those earlier years.
Table of Contents
- Who can use a QCD?
- How must the payment work?
- How much can you give and how does it affect taxes?
- Where can the money go?
Who can use a QCD?
Only an IRA owner who has reached age 70½ can make a qualified charitable distribution. The age test applies to the donor, not to a spouse or joint account. Only certain IRAs qualify.
IRS Publication 526 states that ongoing SEP and SIMPLE IRAs do not qualify, and employer plans such as 401(k)s cannot be used directly without a rollover to an IRA. A rollover can create an eligible source for later giving. A retiree with only 401(k) funds would need to move money to an IRA first, then arrange the charitable transfer from the IRA.
How must the payment work?
The IRA trustee must pay the charity directly. The IRS explains in its November 2023 QCD guidance that a distribution paid to the owner does not qualify, including a check made payable to the owner.
Ask the IRA custodian for its QCD process before moving money. The usual steps are simple: Do not deposit the check personally or redirect it through a personal account. Direct trustee-to-charity payment preserves the tax-free treatment.
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- Confirm age eligibility and available IRA balance
- Name the eligible charity and confirm its mailing instructions
- Direct the trustee to issue payment directly to the charity
- Keep the charity receipt with tax records for the year
How much can you give and how does it affect taxes?
Fidelity reports in its QCD basics guide that the annual exclusion is $108,000 per person for 2025 and $111,000 for 2026. SECURE 2.0 indexes that cap for inflation. A QCD can count toward the IRA owner's required minimum distribution for the year.
Fidelity and IRS RMD guidance state that the donated amount can satisfy the RMD while remaining excluded from gross income and adjusted gross income. That income exclusion helps even without itemizing. IRS Publication 526 states that a nontaxable QCD cannot also be claimed as an itemized charitable deduction, but the donor need not itemize because the exclusion lowers income directly.
Where can the money go?
The recipient must be an organization eligible to receive deductible contributions. IRS guidance summarized in a December 2024 individual tax update states that distributions to donor-advised funds and private foundations generally do not qualify. Choose operating public charities, houses of worship, schools, or other eligible groups.
Confirm eligibility before the transfer, because a payment to the wrong type of fund loses QCD treatment. SECURE 2.0 also permits a one-time QCD to fund a charitable remainder trust or an immediate charitable gift annuity. Carroll Advisory reports the limit as $54,000 for 2025 and $55,000 for 2026, counted toward the annual QCD cap.
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