Donating a Required Minimum Distribution to Charity
See how your IRA's required distribution can be given directly to a charity, offering a tax-advantaged way to support causes without increasing your income.
Retirement account holders must often take annual withdrawals, known as Required Minimum Distributions (RMDs), once they reach a certain age. A provision in the tax code allows these funds to be given directly to a charitable organization in a transaction called a Qualified Charitable Distribution (QCD). This direct transfer can satisfy the annual RMD requirement without the distribution being added to the individual’s income for the year.
Rules and Requirements for a Qualified Charitable Distribution
Age Requirement
To make a Qualified Charitable Distribution, an individual must be at least 70 ½ years old when the distribution is made. This age is distinct from the RMD starting age, which is 73. An individual can make a QCD starting at age 70 ½ even if they are not yet subject to RMDs, allowing for tax-advantaged charitable giving from an IRA prior to the mandatory withdrawal period.
Eligible Retirement Accounts
Qualified Charitable Distributions must originate from specific types of retirement accounts. Traditional IRAs, rollover IRAs, and inherited IRAs are eligible for making QCDs. Inactive SEP and SIMPLE IRAs, meaning accounts no longer receiving employer or employee contributions, can also be used. Employer-sponsored retirement plans, such as 401(k)s or 403(b)s, are not eligible for QCDs.
Annual Limit
The maximum amount an individual can donate through a QCD is adjusted annually for inflation; for 2025, the limit is $108,000 per person. If a married couple files taxes jointly, each spouse can contribute up to this limit from their own IRAs.
A rule can affect the tax-free nature of a QCD. If an individual makes deductible contributions to a traditional IRA for the year they turn 70 ½ or any subsequent year, the amount of the QCD that can be excluded from income is reduced. Any QCDs made in the same or a later year will be considered taxable income up to the total amount of those post-age 70 ½ deductions.
Eligible Charities
The receiving organization for a QCD must be a qualified 501(c)(3) organization, which can be verified using the IRS’s online database. Private foundations and donor-advised funds (DAFs) are not eligible to receive QCDs. A special provision allows for a one-time QCD of up to $54,000 in 2025 to a split-interest entity, such as a charitable remainder trust or gift annuity. This special distribution counts toward the annual limit and can only be made once in a person’s lifetime.
Interaction with RMD
A QCD can satisfy all or part of an individual’s RMD for the year. The first withdrawals from an IRA in a calendar year count toward the RMD, so a QCD intended to meet this requirement should be made before other withdrawals. A QCD that exceeds the annual RMD cannot be applied to the RMDs of future years.
How to Make the Charitable Distribution
To execute a Qualified Charitable Distribution, you must coordinate with the financial institution that holds your IRA. The first step is to contact the IRA custodian to request a direct transfer of funds from your IRA to the chosen charity.
This transfer can be accomplished in two ways. The custodian can issue a check from your IRA payable directly to the charitable organization, which they may mail for you or send to you to forward. Alternatively, if your IRA has a check-writing feature, you may write a check from the account directly to the charity.
The funds must not be paid to you, the IRA owner. A distribution made payable to you, which you then donate, does not qualify as a QCD and will be treated as a taxable distribution.
After the transfer is complete, you should obtain a written acknowledgment from the charitable organization for your records. This document must confirm the date and amount of the contribution and state that you did not receive any goods or services in exchange for the donation.
Tax Reporting for Your Distribution
Your IRA custodian will issue Form 1099-R to report the withdrawal, but this form may not specifically identify the transaction as a QCD. The gross distribution amount will appear in Box 1, and Box 2a, which indicates the taxable amount, might incorrectly show the entire distribution as taxable.
When you file your federal income tax return, you will use Form 1040 to correctly report the QCD. On the line for IRA distributions, report the total amount of the distribution from your Form 1099-R. On the line for the taxable amount, you will report zero if the entire distribution was a QCD, or the remaining amount if only a portion was a QCD. It is common practice to write “QCD” next to this line.
The distributed amount is excluded from your adjusted gross income (AGI), so you cannot also claim a charitable deduction for the contribution on Schedule A. Excluding the distribution from your AGI can be more advantageous than an itemized deduction. A lower AGI can help you avoid phase-outs for other tax credits and may reduce the amount of your Social Security benefits subject to tax.