May 18, 2026
If you are charitably inclined and taking money out of an IRA each year, there is a good
chance you are leaving a tax benefit on the table. A Qualified Charitable Distribution, or
QCD, is one of those strategies that does not get nearly enough attention, but for the
right person, it can make a meaningful difference.
Here is what you need to know.
What is a QCD?
A Qualified Charitable Distribution is a direct transfer of funds from your IRA to a
qualified charitable organization. Instead of withdrawing the money, paying taxes on it,
and then writing a check to your favorite charity, the money goes straight from your IRA
to the charity and you never owe income tax on that amount.
The limit is $111,000 per person per year in 2026, and the transfer must go directly from
the IRA custodian to the charity. You cannot withdraw the funds yourself first.
Who Can Use One?
You must be age 70½ or older to make a QCD. That is true even though the age for
Required Minimum Distributions (RMDs) is now 73. So there is actually a window, ages
70½ to 72, where you can make QCDs before RMDs even kick in.
The charity must be a qualifying 501(c)(3) organization. Donor-advised funds do not
qualify, so this is a strategy for giving directly to the causes you care about.
Why Does This Matter?
The tax benefit here is easy to overlook, but it is significant.
When most people take money out of a traditional IRA, it counts as taxable income,
even if they turn right around and donate it. And since recent tax law changes
dramatically increased the standard deduction, the majority of retirees no longer
itemize. That means the charitable deduction most people assume they are getting for
their donations often does not actually reduce their tax bill at all.
A QCD sidesteps this entirely. Because the money never hits your taxable income in the
first place, you get the full tax benefit regardless of whether you itemize. And if you are
subject to RMDs, a QCD counts toward satisfying that requirement, meaning you can
reduce or even eliminate your RMD income for the year.
Less taxable income can also have downstream effects: lower Medicare premiums, less
exposure to the taxation of Social Security benefits, and a smaller overall tax footprint in
retirement.
The Bigger Picture
For clients who are charitably inclined, this is the kind of planning detail that makes a
real difference over time. It is not complicated once it is set up, but it does require some
coordination to make sure the transfer is done correctly, that it counts toward your RMD,
and that you have the right documentation at tax time.
This is exactly the kind of thing we keep an eye on for our clients. If you are over 70½,
have an IRA, and give to charity in any meaningful way, it is worth a conversation to see
if a QCD makes sense for your situation. We are happy to walk through the details with
you.
Contact us to set up a time to talk.
