Many couples want to support local causes and organizations they care about in retirement but worry about making a mistake with their IRA, triggering taxes they didn’t expect, or leaving a confusing situation for a surviving spouse. Qualified charitable distributions – or QCDs – can relieve much of that pressure. They allow you to give directly from your IRA, reduce taxable income, and keep your retirement plan simple for both of you.
If you’ve heard of QCDs but haven’t felt fully confident using them, you’re not alone. Many families reach this stage of life wanting to give generously and responsibly. QCDs offer a straightforward way to do that, especially as part of a broader, values-aligned giving approach.
What a Qualified Charitable Distribution Is
A QCD is a direct transfer from your IRA to a qualified charity. The money moves from your IRA custodian straight to the organization, and when it’s done correctly, the amount you give is excluded from your adjusted gross income.
You can use a QCD only when:
- The gift comes from a traditional IRA or inherited IRA
- You are 70½ or older at the time of the gift
- The organization is a qualified 501(c)(3)
- The distribution goes directly to the charity
QCDs cannot be used to fund donor-advised funds, private foundations, or split-interest trusts. These rules are there to keep your tax picture clean and ensure the gift is a true charitable distribution, not a vehicle for long-term planning.
You’ll also want to avoid using Roth IRAs. Even though Roth withdrawals are tax-free, they don’t count as QCDs.
Who Can Use QCDs (and Which Accounts Qualify)
You must be at least 70½—not just turning 70½ during the year. That half-year rule matters.
QCDs can only come from IRAs. They cannot come from 401(k)s, 403(b)s, 457 plans, or Roth IRAs. If most of your retirement savings are still in workplace plans, you may be able to roll a portion into an IRA. That step requires care, but for many families it’s worth it. It creates a clean, consolidated structure that makes long-term giving simpler and easier for each spouse to manage.
How QCDs Reduce Taxable Income
Most charitable gifts reduce taxes through itemized deductions. A QCD works differently. Instead of adding the income and then deducting the gift, the amount you give never becomes taxable income at all.
That difference can help in several ways:
- Medicare IRMAA surcharges may be lower
- Less of your Social Security may become taxable
- You may avoid pushing into a higher tax bracket
- You gain more flexibility for future planning around RMDs, Roth conversions, and multi-year giving strategies
Families who want predictability often find this appealing. Lower taxable income tends to ripple through the rest of the tax return, keeping the plan steadier year to year.
A simple example
Imagine you have a $25,000 RMD and want to give $10,000 to charity this year.
If you write a check from your checking account:
- The full $25,000 counts as income
- You may or may not be able to deduct the $10,000
If you use a QCD:
- The $10,000 goes directly from the IRA to charity
- Only $15,000 is taxable income
That cleaner result is why many retirees prefer QCDs for their annual giving.
How QCDs Connect to Your RMD
QCDs can count toward your Required Minimum Distribution for the year, up to the annual limit. This is often where QCDs deliver the clearest benefit.
If you don’t need your full RMD to support your lifestyle, using QCDs can:
- Satisfy part or all of your RMD
- Keep your taxable income lower
- Reduce the feeling of being “forced” to take unwanted income
- Make planning for each spouse more predictable
For couples who want to balance generosity, retirement security, and family support, QCDs often become part of a steady, sustainable income strategy.
When QCDs Are More Effective Than Other Ways of Giving
QCDs aren’t always the right tool, but for many retirees making annual gifts, they offer a blend of simplicity and tax efficiency that’s hard to beat.
QCD vs Cash Gifts
Cash gifts reduce taxes only if you itemize, which many retirees no longer do. QCDs avoid the issue entirely because the income never appears on your return.
QCD vs Appreciated Securities
Gifting appreciated securities can avoid capital gains tax and is often best for larger, irregular, or strategic gifts. QCDs often make more sense when:
- Your giving is steady or recurring
- You are already taking RMDs
- You want to keep taxable income low
You can also combine methods. Many families use QCDs for annual giving and appreciated securities for bigger or multi-year commitments.
QCD vs Donor-Advised Funds
You can’t use a QCD to fund a Donor Advised Fund (also known as a DAF).
But many families use both:
- QCDs for steady support to places like a church or local nonprofit
- DAFs for larger gifts, legacy projects, or years when they want to bunch contributions for tax reasons
This combination gives you control over timing and impact.
A Simple Real-Life Scenario
Frank and Susan give around $6,000 each year to their church and a local food pantry. They don’t itemize, and they don’t need their full RMD for spending.
Using QCDs:
- They satisfy part of their RMD
- Their AGI falls
- Their Medicare premiums may stay lower
- Their taxes remain predictable
- Their giving stays simple and aligned with the rhythm of their lives
This lets them support their community in a way that reflects their values: quiet generosity, responsibility, and stewardship. It also keeps things clear for the surviving spouse and avoids unnecessary complexity for their children later on.
If you’re thinking about using QCDs this year and want help deciding whether it fits your situation, you can schedule a 20-minute Clarity Call for guidance tailored to your circumstances.
Common Mistakes (And How to Avoid Them)
Most mistakes fall into three areas:
1. Using the wrong account
QCDs must come from IRAs – not 401(k)s, 403(b)s, or Roth IRAs.
2. Using the wrong process
If the money touches your bank account, the IRS treats it as taxable income.
3. Missing documentation
You still need an acknowledgment letter from the charity, and your custodian must code the distribution correctly.
These missteps are common because retirees often try to handle a QCD themselves after hearing about it from a friend or family member.
The good news: a few minutes of planning avoids almost every pitfall.
Step-by-Step: How to Make a QCD the Right Way
- Confirm you meet the age requirement.
- Identify the IRA you want to use.
- Contact your custodian for their QCD instructions or form.
- Provide the charity’s legal name and address.
- Have the custodian send the distribution directly to the charity.
- Keep the acknowledgment letter and IRA statement for your tax files.
- Review your giving annually as part of your broader plan to make sure that you are being as tax efficient as possible.
Taking a few extra minutes to follow these steps keeps your giving simple and avoids leaving a future mess for your spouse or children.
How QCDs Support a Purpose-First Plan
QCDs aren’t about chasing every possible tax angle. They support a Purpose-First approach because they:
- Make giving simple rather than stressful
- Reduce income in a clean, predictable way
- Help protect the surviving spouse from unnecessary complexity
- Keep other assets available for family support or future goals
- Allow generosity to stay aligned with your values, not your tax return
- Fit seamlessly with broader estate and legacy conversations
Giving in retirement should feel steady and purposeful, not overwhelming. QCDs offer a clean way to support the causes that matter to you while reducing taxable income and protecting the financial confidence you’ve built together. They work well on their own and even better as part of a thoughtful approach to income, taxes, and legacy.
Common Questions
1. Can I make a QCD before I start taking RMDs?
Yes. You can begin using QCDs at age 70½, even though RMDs don’t start until age 73 for many retirees. During those years, QCDs won’t offset an RMD, but they still reduce taxable income. Many families use this window to test a QCD strategy or support their regular giving without increasing taxes.
2. Does a QCD reduce my MAGI for Medicare purposes?
Often yes. Because a QCD reduces adjusted gross income, it can also reduce modified adjusted gross income — the number Medicare uses for IRMAA surcharges. For retirees concerned about rising premiums, this can be one of the most meaningful advantages.
3. Is there a limit to how much I can give through QCDs each year?
Yes. Each person can give up to the annual QCD limit. Married couples can each use their own IRAs, effectively doubling the amount. For larger gifts, appreciated securities or a donor-advised fund may be more effective.
4. Can I make a QCD to more than one charity?
Yes. You can divide your QCD among multiple qualified charities as long as the total stays within the annual limit. Many families use this flexibility to support their church, a local organization, and a cause tied to their values — all while keeping their tax picture simple.
For many families, QCDs become a natural rhythm: a way to express generosity without adding extra work, confusion, or cost. They help ensure that giving stays aligned with your values and that your financial life remains easy for each spouse to navigate — today and in the years ahead.
If you want to build a giving plan that reflects your values and supports the causes you care about, download Giving With Purpose – a structured, practical guide to making generosity both meaningful and tax-smart.
