How to Make Charitable Donations From an IRA

Making a charitable donation directly from an Individual Retirement Arrangement (IRA) is a financial strategy known as a Qualified Charitable Distribution (QCD). This method involves a direct transfer of funds from an IRA to a qualified charity. Unlike typical withdrawals, a QCD is excluded from the taxpayer’s taxable income. This can be particularly advantageous for individuals who must take annual withdrawals from their retirement accounts.

Eligibility and Contribution Rules

To make a Qualified Charitable Distribution, an individual must be at least 70½ years old at the time of the distribution. This age requirement applies regardless of whether the individual has started taking Required Minimum Distributions (RMDs), which currently begin at age 73.

The funds must come from an eligible IRA, which includes traditional IRAs and rollover IRAs. Inactive SEP and SIMPLE IRAs, meaning accounts that are no longer receiving employer contributions, are also eligible. A QCD can also be made from an inherited IRA, but only if the IRA beneficiary is at least 70½ years old. Distributions from active SEP or SIMPLE IRAs and other employer-sponsored retirement plans like 401(k)s or 403(b)s are not permitted. While a QCD can be made from a Roth IRA, it often provides little to no tax benefit, as Roth IRA distributions are generally already tax-free.

There is an annual limit on how much can be given through a QCD. For 2025, an individual can donate up to $108,000. This limit is per person, meaning a married couple could each donate up to $108,000 from their separate IRAs. This amount is indexed for inflation and may increase in future years.

The receiving organization must be a qualified 501(c)(3) organization, and it is important to verify its status before the transfer. Certain organizations are ineligible, including private foundations and donor-advised funds. The contribution must also be a pure donation, meaning the IRA owner cannot receive any benefit in return.

The Donation Process

The most common method for executing a QCD is to provide direct instructions to the IRA custodian. The account owner will request that a check be sent directly from their IRA to the specified charity. The funds must not be withdrawn by the IRA owner and then subsequently donated, as this would be treated as a taxable distribution.

Some individuals have a checkbook IRA, which gives them direct check-writing privileges from their retirement account. In this scenario, the IRA owner can write a check from the IRA’s checking account and make it payable directly to the qualified charity. This method also satisfies the direct transfer rule.

The IRA owner must obtain a written acknowledgment from the charity for the contribution. This receipt must state the charity’s name, the date, the donation amount, and include a statement confirming that no goods or services were received in exchange. This documentation serves as proof of the qualified distribution for tax filing purposes.

Tax Treatment and Reporting

The primary tax advantage of a QCD is that the distributed amount is excluded from the donor’s adjusted gross income (AGI). This is different from a standard charitable deduction, which requires a taxpayer to itemize. Because a QCD lowers AGI, it provides a tax benefit even to those who take the standard deduction and can also lower taxes on Social Security benefits or reduce Medicare premium surcharges.

For individuals age 73 or older, a QCD can be used to satisfy their annual Required Minimum Distribution (RMD). By using a QCD to fulfill this requirement, the taxpayer can meet their withdrawal obligation without having to recognize the amount as taxable income. The QCD amount counts dollar-for-dollar toward the RMD for the year.

The IRA custodian will issue a Form 1099-R, which reports the total amount distributed from the IRA for the year. When filing their Form 1040, the taxpayer must report the total distribution amount on line 4a. On line 4b for the taxable amount, the taxpayer should enter “0” if the entire distribution was a QCD and write “QCD” next to the line. If only part of the distribution was a QCD, only the non-QCD portion is entered as the taxable amount.