Can I Donate My Required Minimum Distribution to Charity?

Individuals with specific retirement accounts can donate their Required Minimum Distribution (RMD) to a charitable organization. This transaction is formally known as a Qualified Charitable Distribution (QCD). It provides a way for retirees to support causes they care about while managing their retirement income. The process involves specific rules and offers distinct tax outcomes.

Eligibility for a Qualified Charitable Distribution (QCD)

To execute a Qualified Charitable Distribution, an individual must be at least 70½ years old at the time the funds are transferred to the charity. This age requirement is independent of the age at which Required Minimum Distributions begin, which is 73 for most individuals. Therefore, it is possible to make a QCD for a few years before being mandated to start taking RMDs.

The type of retirement account is another determining factor. QCDs can be made from Traditional IRAs, inherited IRAs, and Roth IRAs. They are also permissible from inactive Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, meaning accounts no longer receiving contributions. Distributions from employer-sponsored retirement plans like 401(k)s or 403(b)s are not eligible.

There is an annual limit on the amount that can be transferred as a QCD. For 2025, this amount is $108,000 per person. This cap is indexed for inflation and may be adjusted in future years. It is a per-individual limit, so a married couple could each make a QCD of up to $108,000 from their respective IRAs.

Making the Donation

The funds for a QCD must move directly from the IRA custodian to the designated charitable organization. If the account holder withdraws the money first and then writes a personal check to the charity, the transaction does not qualify as a QCD. In that scenario, the withdrawal is treated as a normal, taxable IRA distribution.

To comply with the direct transfer rule, the IRA custodian can issue a check from the account that is made payable directly to the charity. Some custodians may even offer an IRA checkbook, allowing the account holder to write a check from the IRA and give it directly to the organization.

The receiving organization must also meet certain criteria. A QCD must be made to a qualified 501(c)(3) public charity. It is important to verify the status of the charity before initiating the transfer, as organizations like private foundations and donor-advised funds are ineligible.

There is a special, one-time opportunity to use a QCD to fund certain types of life-income gifts. A taxpayer can make a single election to distribute up to $54,000 in 2025 to a charitable remainder unitrust, a charitable remainder annuity trust, or a charitable gift annuity. This amount counts toward the individual’s annual QCD limit.

Tax Implications of a QCD

A Qualified Charitable Distribution can satisfy an individual’s Required Minimum Distribution for the year. The amount of the QCD directly offsets the RMD dollar-for-dollar. For example, if an individual has an RMD of $50,000 and makes a QCD of $30,000, they would only need to withdraw an additional $20,000 to satisfy their full RMD.

The primary tax benefit of a QCD is that the distributed amount is excluded from the taxpayer’s gross income. This is an advantage over taking a standard IRA distribution and then donating the money. In the latter case, the full distribution amount would be added to income, and the charitable donation would have to be claimed as a separate itemized deduction, which may not benefit taxpayers who use the standard deduction.

Because the QCD amount is not included in income, it directly lowers the taxpayer’s Adjusted Gross Income (AGI). A lower AGI can have several positive secondary effects. It can help reduce the portion of Social Security benefits subject to income tax and may also lower Medicare Part B and Part D premiums, which are subject to Income-Related Monthly Adjustment Amounts (IRMAA).

Reporting a QCD on Your Tax Return

After a QCD is made, the IRA custodian will issue a Form 1099-R. This form reports the total amount distributed from the IRA for the year in Box 1. The form itself will not indicate that the distribution was a QCD; it will simply show a gross distribution, which can cause confusion.

When filing a federal income tax return, the transaction must be reported correctly on Form 1040 to receive the tax benefit. The full distribution amount shown on Form 1099-R should be entered on the line for IRA distributions, typically line 4a.

On the line for the taxable amount of the distribution, typically line 4b, the taxpayer should enter the gross distribution minus the amount of the QCD. If the entire distribution was a QCD, this amount would be zero. To clarify the entry for the IRS, it is recommended to write the letters “QCD” next to line 4b. This notation informs the IRS why the taxable amount reported is less than the gross distribution.