As required minimum distributions (RMDs) begin, many retirees are surprised by how quickly taxable income rises, even when their spending needs haven’t changed.
For individuals who give charitably, this often creates a new tension: how to continue supporting meaningful causes without adding unnecessary income to an already higher tax picture. One strategy that frequently comes up at this stage is the Qualified Charitable Distribution (QCD).
A QCD allows eligible retirees to donate directly from an IRA to a qualified charity while potentially reducing taxable income. When used thoughtfully, it can align charitable intentions with tax efficiency, particularly for those who are required to take distributions but don’t need the full amount.
A Qualified Charitable Distribution (QCD) allows individuals age 70½ or older to donate funds directly from an Individual Retirement Account (IRA) to a qualified charitable organization. When executed properly, the distribution is excluded from taxable income.
Although RMDs currently begin later, QCD eligibility starts earlier—and that distinction matters. Once RMDs are required, QCDs can be used to satisfy part or all of the annual distribution requirement without increasing adjusted gross income (AGI).
Qualified Charitable Distributions often come up when retirees want to continue giving but prefer not to add taxable income as RMDs begin.
To qualify as a QCD, several IRS rules must be met:
You must be at least age 70½ at the time of the distribution. This applies even if your RMDs have not yet begun.
Employer-sponsored plans, such as 401(k)s, are not eligible unless funds are first rolled into an IRA.
The donation must be made to a qualified charitable organization under IRS rules.
QCDs cannot be made to:
Verifying the charity’s eligibility before initiating the transfer is essential.
The most significant benefit of a QCD is that the distribution is excluded from taxable income. Unlike a standard IRA withdrawal, it does not appear as income on your tax return.
This is especially valuable for retirees who:
Because QCDs are excluded from income, they reduce AGI. A lower AGI can influence several other areas of a retiree’s tax picture, including:
A properly executed QCD can satisfy all or part of an annual RMD, reducing the need for additional taxable withdrawals.
By keeping AGI lower, QCDs may help retirees avoid crossing income thresholds that trigger higher Medicare premiums.
Unlike charitable contributions made with personal funds, QCDs offer a tax benefit even if you do not itemize deductions.
While not a direct estate tax strategy, QCDs can reduce the size of tax-deferred accounts over time, an important consideration for retirees with charitable intentions.
At Spaugh Dameron Tenny, questions about QCDs most often come up when clients approach RMD age and reassess how charitable giving fits into their broader tax picture.
| Feature | Qualified Charitable Distribution | Traditional Cash Donation |
| Source of funds | IRA | Bank or taxable income |
| Tax Treatment | Excluded from income | Deduction if itemized |
| Works with standard deduction | Yes | No |
| Can satisfy RMDs | Yes | No |
| Affects AGI | Lowers AGI | Does not |
| Annual limit | $111,000/individual for 2026 | $222,000/couple for 2026 | Subject to AGI limits |
If the funds are distributed to you first and then donated, the transaction will not qualify as a QCD.
Married couples filing jointly can each make a QCD, effectively doubling the annual limit to $222,000 in 2026.
You must be at least age 70½ at the time of the distribution.
No. Donor-advised funds are not eligible recipients.
Yes. A properly executed QCD can satisfy part or all of your RMD.
No. QCDs are excluded from income and cannot also be deducted.
Qualified Charitable Distributions can be a thoughtful way to continue charitable giving while managing the tax impact of required distributions. For retirees who are already charitably inclined, QCDs often serve as a more efficient alternative to taking RMDs and donating separately.
As with any retirement tax strategy, the value of a QCD depends on how it fits into your broader financial picture—including income needs, tax exposure, and long-term goals.
If charitable giving is part of your retirement plan, understanding how QCDs interact with RMDs and taxable income can be helpful. Reach out to one of our financial planners, as they can help evaluate whether this strategy aligns with your overall approach.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
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Megan Robinson, FPQP™, CRPS®, serves as the investment coordinator at Spaugh Dameron Tenny, where she oversees account transfers, monitors client portfolios, and implements tailored investment strategies. With certifications in financial planning and retirement plan design, Megan ensures that the operational side of wealth management runs smoothly and accurately. Known for her attention to detail and client-first mindset, she plays a crucial behind-the-scenes role in providing executives, physicians, dentists, and retirees with efficient, coordinated financial care.
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