Once you turn 73, the IRS requires you to start taking money out of your traditional IRA, even if you don’t need it. These Required Minimum Distributions (RMDs) are taxed as ordinary income and can push up your adjusted gross income (AGI), potentially increasing Medicare premiums, making more of your Social Security taxable, or disqualifying you from other tax benefits.
But if you’re already charitably inclined, there’s a smarter option: the Qualified Charitable Distribution (QCD).
A QCD allows you to transfer funds directly from your IRA to a qualified charity, bypassing your tax return entirely. It still satisfies your RMD, but unlike a regular distribution, it doesn’t show up as income. That means you can reduce your tax bill and support causes you care about, all in one move.
To qualify:
- You must be at least 70½ years old.
- The gift must go directly from your IRA to the charity (you can’t touch the funds).
- The receiving organization must be a 501(c)(3) public charity (donor-advised funds and private foundations don’t qualify).
As of 2025, you can give up to $108,000 per year via QCDs. Even if you’re not yet subject to RMDs, this strategy can be a tax-efficient way to give once you cross the age threshold.
Many retirees give to charity by writing checks from their checking account, but that often provides no tax benefit, especially if you don’t itemize deductions. QCDs offer a better way: you give from your IRA and skip the tax altogether.
It’s one of the few strategies that can both reduce your tax burden and make a real impact.
If you’re planning to give, consider giving smarter. Talk to your advisor before taking this year’s RMD, because once that distribution hits your bank account, it’s too late to make it a QCD.