The benefits of qualified charitable distributions from an IRA

What is a qualified charitable distribution?  

A qualified charitable distribution (QCD) is a nontaxable distribution from a traditional, SEP, SIMPLE or inherited IRA made directly to a qualifying charity that you can make beginning at age 70½. Neither you nor the eligible charity will have to pay income taxes on the distribution. 

What are the benefits of a qualified charitable distribution?

A QCD from an IRA offers the following retirement planning and tax benefits: 

• Maximizes your charitable giving: Because the donation goes straight to the charity from your IRA, you do not pay any income tax due on the funds, allowing you to potentially give more than you might otherwise.  
• Satisfies your required minimum distributions (RMDs): QCDs can satisfy all or part of your RMD — the minimum you must withdraw from a qualified retirement plan each year once you reach age 73 — for the year you donate the money. 
• Lowers taxable income: In addition to satisfying your RMD, taking a QCD can also lower your taxable income for the year, ultimately lowering your tax bill. It can also allow you to hold on to other assets — such as Roth or non-qualified accounts — longer, potentially reducing your RMDs in the future. 

Qualified charitable distributions requirements

QCDs are subject to numerous rules and requirements by the IRS. 

• Age requirement: You must be 70½ or older to make a QCD.  
• Charity requirements: The charity you donate to via a QCD must be a 501(c)(3) organization, eligible to receive tax-deductible contributions. Some charities may not qualify for QCDs, including private foundations, supporting organizations and donor-advised funds. A QCD may fund a charitable remainder unitrust, charitable remainder annuity trust or charitable gift annuity, up to a maximum one-time amount of $55,000 for 2026. 
• Ordinary income requirement: QCDs are limited to the amount that would otherwise be taxed as ordinary income, which means taxable amounts are distributed from your IRA first rather than proportionally. 
• Maximum contribution limit: For 2026, the maximum amount per year that can qualify for a QCD is $111,000. This limit accounts for the total amount you can distribute to one or more charities in a calendar year. If you’re married and file taxes jointly, your spouse can also make a QCD of up to $111,000 from his or her own IRA within the same tax year. Any amount donated with a QCD above your RMD does not count toward satisfying future RMDs. 
• RMD eligibility requirements: For a QCD to count toward your current year's RMD, the funds must come out of your IRA by your RMD deadline, typically Dec. 31. 
• Direct transfers rule: Funds must be contributed directly to the qualifying charity. Any distributions that go to you as the IRA owner and then to charity will not qualify as a QCD. Due to what’s known as the “first-dollars-out” rule, if you take any distributions from your IRA before making a QCD, the IRS considers the initial distribution as your RMD for the year and treats it as taxable income. 
• Limitations on deductibility for those who continue to contribute to an IRA: Contributing to an IRA after age 70 ½ may reduce the QCD amount you can deduct from your gross income. (The amount of deductible IRA contributions you make to your IRA after that age will reduce the amount of the QCD that is excluded from your gross income.) 
• Tax filing requirements: The QCD must be accurately filed in your tax return. It’s important that your tax professional is aware of any QCDs implemented during the year, as financial institutions are not required to indicate distributions are QCDs on Form 1099-R.