How to Use Your RMD to Donate to Charity

Once you reach age 73, the government requires you to start taking withdrawals from most retirement savings accounts. This withdrawal is known as a Required Minimum Distribution (RMD) and is treated as taxable income. However, it is possible to direct these funds to a qualified charity and, by following specific rules, exclude that amount from your income for tax purposes. This strategy allows you to fulfill your charitable goals while managing your tax liability.

Understanding Qualified Charitable Distributions

A Qualified Charitable Distribution (QCD) is a withdrawal from an individual retirement account sent directly to a charity. The account owner must be at least 70½ years old at the time the funds are distributed. This age requirement is distinct and has not changed, even as the general age for beginning RMDs has increased.

There is a maximum amount an individual can donate through a QCD each year and have it excluded from income. For 2025, this limit is $113,000 and is indexed for inflation. The limit is applied on a per-person basis, meaning a married couple could each make a QCD of up to $113,000 from their respective IRAs.

The type of retirement account you hold is an important factor. QCDs are permitted from Traditional IRAs, Rollover IRAs, and Inherited IRAs for beneficiaries over 70½. They can also be made from inactive SEP and SIMPLE IRAs. However, distributions from employer-sponsored plans like 401(k)s or 403(b)s are not eligible, and Roth IRAs are also excluded as their distributions are typically tax-free.

For the donation to qualify, it must go to an eligible 501(c)(3) organization, which are public charities recognized by the IRS. You should verify an organization’s status before initiating a transfer. Donations to private foundations, supporting organizations, and donor-advised funds do not count as QCDs.

A QCD can be used to satisfy all or part of your RMD for the year. For example, if your RMD is $40,000 and you direct a $40,000 QCD to a charity, you have satisfied your RMD without that amount being added to your taxable income. Any QCD amount exceeding your RMD does not carry over to satisfy RMDs in future years.

Making the Direct Transfer

To make a Qualified Charitable Distribution, you must contact the financial institution that serves as your IRA custodian. You will need to provide instructions for them to make a distribution directly to your selected charitable organization. The funds cannot be withdrawn by you and then given to the charity.

The most common method is for the custodian to issue a check from your IRA made payable directly to the charity. In some cases, the custodian may mail the check to your home address, but it will still be payable to the charity. You would then be responsible for delivering the check.

After the donation is made, you must obtain a written acknowledgment from the charitable organization to substantiate the gift. The receipt must state the charity’s name, the date, and the amount of the contribution. It must also include a statement confirming you did not receive any goods or services in return, as any benefit could compromise the tax-free nature of the distribution.

Reporting the Distribution for Tax Purposes

After the tax year, your IRA custodian will send you Form 1099-R. This form reports all distributions from your account, and the total amount, including any QCDs, will appear in Box 1 as the gross distribution.

Your custodian is not required to identify the portion of the distribution that was a QCD. As a result, Box 2a, the taxable amount, will likely show the entire distribution as being taxable. It is your responsibility to correctly report the non-taxable portion on your income tax return.

When filing your Form 1040, you will report the full gross distribution from Form 1099-R on the line for IRA distributions. On the line for the taxable amount, you report only the amount that is actually taxable. If your entire distribution was a QCD that did not exceed the annual limit, this amount could be zero.

To clarify this, you should write the letters “QCD” next to the line where you report the taxable amount. This notation informs the IRS why you are excluding a portion or all of the IRA distribution from your income.