It's the season for giving. And if you already give to charity, there's a way to do it from your IRA that most people have never heard of.
This week we're walking through David's guide to required minimum distributions. Yesterday was the Medicare domino: how RMD income can raise your premiums two years later. Today is one of the best tools for keeping that income down.
What is a Qualified Charitable Distribution?
A Qualified Charitable Distribution, or QCD, sends money from your IRA straight to a charity without it ever counting as your income.
Why is it smarter than writing a check?
- It counts toward your RMD. Once RMDs start, a QCD satisfies all or part of the required amount.
- It stays off your income. The money isn't added to your adjusted gross income, which can help keep you under the Medicare lines from yesterday. In exchange, you can't also deduct it.
- It can start early. You must be 70½ or older on the date of the gift. That's earlier than RMDs begin, so a QCD can work before you have an RMD at all.
How much can you give?
Up to $111,000 a person in 2026. The limit rises with inflation, and a married couple can each give up to the limit from their own IRAs. Confirm the current year's limit before you give.
What are the rules?
- From an IRA, paid directly to the charity. Not from a 401(k), and not from an active SEP or SIMPLE IRA. A check made out to you doesn't qualify.
- To an eligible public charity. Donor-advised funds, private foundations and supporting organizations don't qualify.
Where did the QCD come from?
QCDs were made permanent in 2015, and SECURE 2.0 tied the limit to inflation starting in 2024. It also allowed a one-time QCD of up to $55,000 in 2026 to a charitable gift annuity or a charitable remainder trust.
What should you do with this?
- If you give to charity and you're 70½ or older, ask whether a QCD fits before your year-end gifts.
- Ask your IRA custodian how they send a QCD directly to the charity.
- Keep the charity's acknowledgment for your records, and tell your tax professional it was a QCD.
Tomorrow, in the last part of this series: what happens when your kids inherit your IRA.
The full QCD rules are in David's guide, The Hidden History of the Rule That Taxes Your Retirement. If you'd like to plan your giving alongside your tax professional, you can begin the conversation here.
This is Part 6 of The Rule That Taxes Your Retirement, a seven-part series from David Schaeffer's guide. Source: IRS Notice 2025-67. For education only. Not tax, legal or investment advice.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.