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Qualified Charitable Distributions (QCDs) from an IRA After Age 70½

If you are age 70½ or older, you can make a Qualified Charitable Distribution (QCD) directly from your IRA to an eligible charity (Such as: First United Methodist Church). When handled properly, the distribution can satisfy part or all of your required minimum distribution (RMD), if one applies, and is generally excluded from your taxable income.

Key points

  • Eligibility: You must be age 70½ or older on the date of the distribution.
  • Source account: QCDs generally come from traditional IRAs and some inherited IRAs, but not from active SEP or SIMPLE IRAs.
  • Direct payment: The funds must go directly from the IRA custodian to a qualified charity.
  • Eligible charities: The organization must generally be a qualified 501(c)(3) public charity. Donor-advised funds, supporting organizations, and most private foundations do not qualify.
  • Tax treatment: A QCD is generally excluded from income rather than claimed as a charitable deduction.
  • Annual limit: The IRS sets a yearly limit per person, so confirm the current amount before making the transfer.

Why people use a QCD? A QCD can help you:

  • Support a charity you care about
  • Reduce your taxable income
  • Satisfy all or part of your RMD (if you have one)

Important cautions

  • If the check is made payable to you rather than the charity, it may not qualify.
  • You should keep:
    • the IRA distribution record
    • the charity acknowledgment letter
  • The tax reporting can be a little tricky because the IRA custodian may still issue a Form 1099-R showing the distribution; your tax return generally needs to reflect that it was a QCD.

Simple example

If your RMD is $8,000 and you direct $5,000 from your IRA straight to First United Methodist Church, that $5,000 may count toward the RMD and generally would not be included in your taxable income.

Next step

Before making a QCD, confirm that the charity qualifies, instruct your IRA custodian to send the funds directly to the organization, and keep both the IRA distribution record and the charity acknowledgment letter for your tax files.

 

Ken Wall, Finance Team

Retired Financial Planner and former CFP