All About Qualified Charitable Distributions

Qualified charitable distributions (QCDs) allow you to transfer money directly from your individual retirement account (IRA) to a qualified charity. In addition to supporting causes you care about, this approach can offer tax advantages by keeping the donated amount out of your taxable income. Because QCDs are subject to specific rules and eligibility requirements, it’s worth understanding how they work before moving forward. A financial advisor can also help you determine whether this strategy fits into your broader tax and retirement plan. Find a financial advisor with SmartAsset’s free financial advisor matching service.

Qualified Charitable Distributions Definition

A QCD is the withdrawal of funds from an IRA with the intention of donating them directly to a qualified charity. There are tax benefits that go along with this strategy. You can use QCDs when you’re taking required minimum distributions (RMDs) in retirement.

You may qualify for a QCD if you have a traditional IRA, an inactive SIMPLE IRA (meaning you and your employer are no longer contributing to the account during the same tax year that you’re making a charitable contribution), an inactive SEP-IRA or an inherited IRA. However, certain rules apply.

Making qualified charitable distributions from Roth IRAs is usually a bad idea (and it’s usually prohibited). Why? For one thing, a QCD must be a distribution that would normally be subject to taxation. Roth IRA distributions are usually tax-free.

Qualified Charitable Distributions Rules

All About Qualified Charitable Distributions

Qualified charitable distributions are only available if you meet specific eligibility rules. To make a QCD, you must be at least age 70 ½, and the transfer must come directly from your IRA to a qualified charity. You may direct QCDs to more than one charity in the same tax year, as long as the total amount does not exceed $111,000 in 2026. For married couples filing jointly, each spouse may make QCDs from their own IRA, allowing up to $111,000 per person to qualify in the same year.

In order to get credit for a qualified charitable distribution, it must go to a charitable organization that accepts tax-deductible contributions (i.e. a 501(c)(3) organization). It can’t benefit you (the donor) in any way. Charities that cannot receive QCDs include private foundations, donor-advised funds and supporting organizations.

What’s more, a qualified charitable distribution can only come directly from your retirement account. That means your IRA custodian needs to make the check from your IRA payable to a qualifying charity. If you withdraw funds and then try to make a charitable donation, that won’t be considered a qualified charitable distribution.

Qualified Charitable Distributions and Required Minimum Distributions

Forgot the rules for RMDs? Here’s a quick refresher. Retirees with certain accounts must begin pulling out their savings when they reach age 73 (75 for people born in 1960 or later). Withdrawals are taxed as ordinary income. If you don’t take your RMDs, you’ll get hit with a 25% penalty (10% if the RMD is corrected within two years).

If you want a QCD to satisfy your required minimum distribution, you’ll need to transfer funds from your IRA by the end of the year. Any amount above what you’re required to withdraw can’t count as a RMD for the following year. For example, let’s say your annual RMD is $20,000 and you make a $25,000 QCD for 2026. The extra $5,000 cannot go toward your RMD for 2027.

Qualified Charitable Distributions and Your Tax Bill

With the exception of Roth IRAs, most IRAs are subject to required minimum distributions. But the money you give to charity via a QCD isn’t considered part of your taxable income. In other words, you can lower your federal income tax bill by making a qualified charitable distribution. To find out how a QCD might affect your state income tax bill, you’ll need to contact a tax accountant.

If you make a QCD, it’s best to hold onto the receipt from the charity you donated to, just in case you need that information for tax purposes. Your IRA custodian will report your QCD to the IRS (using Form 1099-R) as either a normal distribution (if it’s from an IRA you didn’t inherit) or a death distribution (if it’s from an inherited IRA).

By reducing your taxable income, QCDs can also reduce the amount of Social Security taxes you pay. They may also help you avoid the 3.8% Medicare surtax on investment income. The surtax applies to individuals with a modified adjusted gross income that exceeds a certain threshold. If it looks like you have less income subject to taxation, you may not have to worry about the surtax at all.

Bottom Line

Making a qualified charitable distribution from an IRA to a qualifying charity is one way to lower your tax bill. Such a move could be better than making a tax-deductible contribution since you won’t get credit for a charitable donation if you don’t itemize your deductions.

Don’t forget to make a note of your QCD on your income tax return. You can do that by adding the amount you donated to the total amount of IRA distributions you took. If all of your distributions were QCDs, you can indicate that the taxable amount is zero and enter “QCD.”

Tax Planning Tips

A financial advisor can help you with your tax strategy. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Filing your taxes each year can be a pain, but it helps to know what you might be looking at in terms of a return before you actually go to file.To see what your tax return might look like, use SmartAsset’s free tax return calculator.