IRA QCDs- A way to give to your favorite charities
By Kasey Franzoni
DID YOU KNOW that Individual Retirement Account (IRA) owners and Inherited IRA beneficiaries over age 70 ½ are eligible to make donations to qualifying charitable organizations of their choice, as well as potentially satisfy their applicable Required Minimum Distribution (RMD) for the current tax year? Well, according to the Internal Revenue Service (IRS), they can!
Here is an example of how this works: Jane turns 75 years old in 2025. She has a Traditional IRA account with a large balance and, just as she has in prior years, will be required to take $75,000 out of this IRA before 12/31/25. This is Jane’s 2025 Required Minimum Distribution (RMD). Jane does not want or need $75,000 in income and she really does not want to have to pay the taxes on such a large distribution amount. Jane absolutely loves her local community theater group and wants to donate funds towards their next production. She contacts her TCV Administrator to make a direct gift to the theater. The Admin has a check for $75,000 made payable in the name of the theater group, which is a qualified charitable 501(c)(3) organization.
Jane mails the check to the theater group business manager, who receives and deposits the check. Jane has not only accomplished a Qualified Charitable Distribution (QCD) from her IRA, but she has also satisfied her RMD for the year and she will have little to no income tax consequences.
Both Jane and the theater group benefit greatly from this type of transaction.
If you are interested in making a QCD from your IRA, here is the “rule book” to follow:
- Eligibility: To make a QCD, you must be 70 1/2 years old or older.
- IRA Types: QCDs can be made from Traditional, Rollover or Inherited IRAs.
- Distribution Amount: An individual may donate up to $108,000 in 2025, from your IRA to a qualified charity.
- Tax Implications: The amount of the QCD is excluded from your taxable income.
- Required Minimum Distributions (RMDs): In 2025, for those age 73 or older, QCDs can count towards your Required Minimum Distribution (RMD) for the year.
- How to Make a QCD: Contact your IRA financial advisor (IRA Custodian or Trustee) and request a QCD, ensuring the funds are transferred directly from your IRA to the charity.
- Charity Requirements: The charity must be a 501(c)(3) organization.
- No Deduction Required: You do not need to itemize deductions to take advantage of a QCD.
- Reporting: your IRA Custodian or Trustee will report the QCD on Form 1099-R.
If you are interested in making this type of gift or other available donation options, please contact your Trust Administrator for further information.