For many retirees, giving back is a meaningful way to use their financial resources. If you’re over a certain age, you may be able to support charities directly from your IRA through something called a Qualified Charitable Distribution (QCD). This strategy not only benefits causes you care about—it can also reduce your tax bill.
What Is a Qualified Charitable Distribution (QCD)?
A QCD is a direct transfer of funds from your traditional IRA to a qualified charity. Instead of taking money out of your IRA and then writing a check to charity, the funds go straight from the IRA custodian to the charitable organization.
Who Can Do a QCD?
- You must be age 70½ or older at the time of the distribution.
- The distribution must come from a traditional IRA (some SEP and SIMPLE IRAs may qualify if they’re no longer active).
- Roth IRAs are generally not used for QCDs because distributions are already tax-free.
How Much Can You Give?
- You can give up to $100,000 per year per individual (so $200,000 per married couple filing jointly if both have IRAs).
- The QCD amount counts toward your Required Minimum Distribution (RMD) if you’re age 73 or older, but it won’t show up as taxable income.
Why Consider a QCD?
- Lower taxable income: Because the money never hits your taxable income, you could reduce your overall tax liability.
- No need to itemize deductions: Even if you take the standard deduction, you still get the tax benefit of charitable giving through a QCD.
- Support causes you care about: You can direct funds to eligible charities in a tax-efficient way.
What Doesn’t Count as a QCD?
- Donating to donor-advised funds, private foundations, or supporting organizations doesn’t qualify.
- Writing a personal check to charity and then trying to claim it as a QCD doesn’t work—the money must go directly from your IRA custodian to the charity.
The Bottom Line
Yes—you can do a Qualified Charitable Distribution from your IRA if you meet the requirements. It’s a smart way to give generously while keeping your taxable income lower, especially if you’re already required to take distributions from your IRA.
If you’re considering this strategy, be sure to:
- Confirm that the charity qualifies.
- Coordinate with your IRA custodian so the transfer is done properly.
- Speak with a financial or tax advisor to ensure a QCD fits into your broader retirement and charitable planning.
Steffens Financial Corp. does not provide legal or tax advice. Please consult a legal or tax professional regarding your individual situation.
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