Qualified Charitable Contribution (QCD)

A Qualified Charitable Distribution (QCD) is a way for individuals aged 70½ and older to donate to charity directly from their Individual Retirement Accounts (IRAs) without incurring income tax on the distribution. Essentially, it allows you to fulfill your Required Minimum Distribution (RMD) (if applicable) while also supporting a charity, and potentially reducing your overall tax burden.

Key aspects of a QCD:

• Age Requirement: You must be 70½ years old or older to make a QCD. 
• IRA Requirement: QCDs can only be made from traditional, SEP, or SIMPLE IRAs, not from 401(k)s or other workplace retirement plans.
• Direct Distribution: The distribution must be made directly from your IRA to a qualified charity. 
• Tax Benefits: QCDs are excluded from your taxable income, meaning you don't pay income tax on the distributed amount, according to the National Society of Tax Professionals. 
• RMD Compliance: QCDs can satisfy all or part of your required minimum distribution (RMD) if you are subject to them. 
• Annual Limit: In 2025, the maximum amount you can donate through a QCD is $108,000 per individual. 
• Reporting Requirements: While QCDs are not taxed, they still need to be reported on your tax return. 

How it works:

• Contact your IRA custodian: Inform them that you want to make a QCD to a specific charity. 
• Provide charity information: Give your IRA custodian the charity's name and address. 
• Distribute the funds: The custodian will then send the money directly to the charity.