If charitable giving is part of your long-term plan and you’re age 70½ or older, a thoughtful strategy can help you give more while reducing your lifetime tax burden. One of the most effective tools is the Qualified Charitable Distribution (QCD). We love to help clients implement this with their IRAs.
A QCD allows you to transfer funds directly from your IRA to a qualified charity, normally via check, straight from the custodian. Because the distribution goes straight to the charity, it is excluded from your taxable income even though it comes from a pre-tax account. This can help keep your income lower, potentially reducing taxes on Social Security and avoiding Medicare premium surcharges (IRMAA).
Once you reach age 73, QCDs become even more valuable. Qualified Charitable Distributions from your IRA can satisfy your required minimum distribution (RMD), which is otherwise taxable. By using a QCD to meet your RMD, you reduce both current taxable income and the future size of your IRA, which lowers future RMDs as well.
RMDs are calculated annually based on your prior year-end account balance and life expectancy. For larger IRAs, these RMD distributions can significantly increase taxable income, potentially pushing you into higher tax brackets or triggering additional taxes and surcharges. Using QCDs is one of the most efficient ways to manage that risk.
QCDs also provide a key advantage over traditional charitable giving:
You do not need to itemize deductions to receive the tax benefit.
You avoid AGI-based charitable deduction limits.
You can direct up to $111,000 per person in 2026 to charity through QCDs.
From a tax standpoint, this makes QCDs particularly attractive for clients who take the standard deduction or are making larger gifts.
Keeping income lower through QCDs can also help:
Reduce the amount of Social Security subject to tax (up to 85% can be taxable depending on income).
Avoid crossing Medicare IRMAA thresholds, where even a small increase in income can lead to materially higher premiums for both spouses.
Not all charities qualify.
Eligible organizations must be 501(c)(3) public charities. Donor-advised funds and private foundations are not eligible recipients for QCDs. We like to send checks directly to charities from IRAs to utilize the QCD process.
Charitable giving is ultimately about impact, but it can also be highly tax efficient. A well-structured QCD strategy allows you to align your values with smart tax planning and maximize what you’re able to give over time.
If you’re considering incorporating QCDs into your strategy, we’d be happy to help you evaluate how this strategy fits into your broader plan.
Disclosure
The content and information presented herein are for educational purposes only and should not be construed as a solicitation or offer to buy or sell any investment services. Nothing contained in this material should be considered an offer to provide any product or service in any jurisdiction that would be unlawful under the securities laws of that jurisdiction. The information contained herein has been obtained from sources believed to be reliable; however, the Firm does not guarantee accuracy or completeness of the information. Such information is subject to change at any time without notice. Before taking any action, you should consult with a qualified tax, legal, or financial professional.