A Qualified Charitable Distribution (QCD) allows individuals aged 70½ or older to transfer up to $111,000 annually ($108,000 in 2025) directly from an IRA to a qualified charity, satisfying Required Minimum Distributions (RMDs) without increasing taxable income. This tax-efficient strategy avoids taxes on the distribution, unlike taking the RMD and donating cash.
Key Aspects of QCDs for RMDs:
- Eligibility & Limits: Must be 70½+; max QCD is $111,000 per person annually ($222,000 for married couples) as of 2026.
- Tax Benefit: The amount donated via QCD is excluded from your adjusted gross income (AGI), which can lower tax liability, prevent higher Medicare premiums (IRMAA), and reduce taxes on Social Security.
- Direct Transfer Required: Funds must go directly from the IRA custodian to the charity.
- Deadline: The transfer should be completed by Dec. 31 to satisfy the RMD for that tax year.
- Eligible Accounts: Primarily traditional and Roth IRAs; employer-sponsored plans like 401(k)s may require a rollover to an IRA first.
How to Execute a QCD:
Contact your IRA custodian to request a direct transfer (often called an IRA Charitable Rollover) to a qualified 501(c)(3) organization. Ensure the charity receives the funds by year-end to count toward your 2026 RMD. Note that QCDs cannot be made to donor-advised funds (DAFs).
You can read more about the specific 2026 rules regarding QCDs and other charitable deductions on Charles Schwab.