WHAT IS A QCD?
A Qualified Charitable Distribution (QCD) is a direct transfer of funds from an individual’s IRA (Individual Retirement Account) to a qualified charity. QCDs allow individuals to manage required minimum distributions (RMDs) from an IRA while supporting charitable causes in a tax-efficient way.1
HOW DOES A QCD WORK?
Individuals aged 70½ or older can make tax-free charitable donations through a QCD, which allows them to exclude the distribution from their taxable income.
- The annual limit for QCDs increases with inflation by $5,000 each
- For 2025, individuals can contribute up to $105,000.
For those 73 and older, QCDs also count towards the required minimum distribution for the year. However, the QCD must be completed by the annual RMD deadline, typically December 31.
HOW ARE QCDS MADE?
To make a QCD, individuals must select the charity (an IRS-recognized 501(c)(3)), specify the amount, and authorize the IRA custodian to transfer funds directly to the organization. The funds do not pass through the individual’s hands, ensur- ing compliance with QCD guidelines.
WHAT IS ALLOWED?
BENEFITS OF A QCD
Avoiding an IRA’s Required Minimum Distribution when the income is not wanted or needed
Making a larger charitable contribution than one would otherwise
1 https://www.irs.gov/newsroom/give-more-tax-free-eligible-ira-owners-can-donate-up-to-105000-to-charity-in-2024
The Internal Revenue Service reminds individual retirement arrangement (IRA) owners age 70½ and older that they can make up to $105,000 in tax-free charitable donations during 2024 through qualified charitable distributions. That’s up from $100,000 in past years. For those age 73 or older, qualified charitable distributions (QCDs) also count toward the year’s required minimum distribution (RMD).
The information presented is for informational purposes is not intended to constitute financial, investment, legal, or tax advice. Before making any financial decisions or engaging in philanthropic activities, consult with qualified professionals, including financial advisors, tax experts, and legal counsel.