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Guidelines for Making a QCD by Julie Jason

A qualified charitable distribution (QCD) is a way to donate to charity from a traditional (tax-deferred) IRA. However, there are specific requirements you need to follow to make a QCD and benefit from tax savings (the QCD withdrawal avoids taxation).  

Here are the basic rules that apply. 

  • You must be at least 70 1/2 years old at the time the charity receives your QCD donation. A person who meets the age requirement but does not have an IRA cannot stand in for the IRA owner. Only the owner can do a QCD for him- or herself, not the spouse. However, both spouses can do their own QCDs, assuming they meet all other requirements. To count for a particular tax year, the QCD must actually be received by the charity by 12/31 of the tax year in question. 
  • The QCD can be any amount up to and including $100,000 per year per IRA owner. As a result of SECURE Act 2.0, the $100,000 will be indexed starting in 2024, meaning there will be a cost-of-living increase in the QCD maximum.
  • The charity you choose to receive QCD funds must be a “qualified charity.” To double-check, use the IRS Tax Exempt Organization Search Tool at tinyurl.com/497um8xp.
  • You must direct the custodian of your IRA to make the QCD payment directly from your IRA to a qualified charity.  
  • You must have an acknowledgement of the contribution from the charity. 
  • A QCD can count toward a required minimum distribution (RMD) from an IRA.

To find out more about QCDs, visit the IRS website at tinyurl.com/566zpz6r.

Also see the following resources: Fidelity Learning Center (tinyurl.com/msaupc3k); Schwab Charitable (tinyurl.com/bdde67u7); Charles Schwab Asset Management (tinyurl.com/afxcmehy); and my column on the new QCD split-interest entity (tinyurl.com/e5tvnujy). 

Have a question for me? Send it to readers@juliejason.com. The question could appear anonymously in my blog, in my posts for Forbes or in my nationally syndicated column for Andrews McMeel Syndication.

To read Julie Jason's books, go to: https://juliejason.com/author/julies-books.