How to Make a Qualified Charitable Distribution

A Qualified Charitable Distribution (QCD) is a withdrawal from an individual retirement account (IRA) that is sent directly to a charity. For individuals required to take annual Required Minimum Distributions (RMDs), a QCD can satisfy all or part of that obligation. The amount transferred is excluded from the taxpayer’s adjusted gross income (AGI), providing a significant tax benefit, especially for those who do not itemize deductions. This AGI reduction can also help taxpayers avoid income-related surcharges on Medicare premiums.

Determining Your Eligibility

To make a Qualified Charitable Distribution, an individual must meet specific criteria. The primary requirement is age; the IRA owner must be at least 70½ years old at the time the distribution is made. This age threshold is fixed and does not align with the age for Required Minimum Distributions, which allows a QCD to be made even if RMDs have not yet started.

The source of the funds is also regulated. QCDs must originate from Traditional IRAs, Rollover IRAs, inherited IRAs, or inactive Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. An inactive plan is one that no longer receives employer contributions. QCDs cannot be made from employer-sponsored retirement plans like 401(k)s or 403(b)s.

The receiving organization must be a qualified 501(c)(3) charity. However, the law prohibits making these distributions to private foundations, donor-advised funds, and supporting organizations. Verifying the charity’s eligibility before initiating the transfer is a necessary step.

Information and Documentation to Gather

Before initiating a QCD, you will need your IRA account number and the contact information for your IRA custodian. You must also collect the charity’s full legal name, its mailing address, and its Taxpayer Identification Number (TIN). This information ensures the funds are directed correctly.

After the contribution is made, you must obtain a written acknowledgment from the charitable organization for any donation of $250 or more. This document is for your tax records. The acknowledgment must include the name of the charity, the date of the contribution, the amount of the donation, and a statement confirming that no goods or services were provided in exchange for the contribution.

The Distribution Process

The process begins by contacting your IRA custodian to request that a distribution be made directly to the charitable organization you have selected.

There are two primary methods for executing the transfer. The first method is for the IRA custodian to send a check from your IRA directly to the charity. In this scenario, the funds never pass through your hands, ensuring a clean transfer for tax purposes.

A second method involves the IRA custodian issuing a check that is made payable to the charity, but mailed to you. You are then responsible for delivering the check to the organization. The check must not be made out to you; the payee must be the charitable organization. This is still considered a direct transfer as long as the check is properly payable to the charity.

Tax Reporting Requirements

Your IRA custodian will issue a Form 1099-R early in the following year, which reports the total amount of the withdrawal as a gross distribution. It is your responsibility to correctly report this transaction on your federal tax return to secure its tax benefits.

When filing your tax return using Form 1040 or 1040-SR, you must account for the QCD. You will report the total distribution amount from your Form 1099-R on line 4a. On line 4b, for the taxable amount, you will enter zero if the entire distribution was a QCD and write the letters “QCD” next to the line. This notation signals that the distribution should be excluded from your taxable income.

There is an annual limit on the amount that can be excluded from income as a QCD. For 2025, this limit is $108,000 per individual, and this amount is subject to an annual inflation adjustment. If a married couple both meet the age requirement and have their own separate IRAs, each spouse can make a QCD up to the annual limit. Any amount distributed above this annual limit will be treated as a normal, taxable IRA distribution.