What are Qualified Charitable Distributions (QCDs) and what do they do?

Michael Anicito |
How to save tax dollars when gifting to charities


What are Qualified Charitable Distributions (QCDs) and what do they do?

With required minimum distributions (RMDs) back in 2021 (postponed in 2020), anyone over the age of 72 (revised in the SECURE ACT), is mandated to take a distribution from their retirement account(s).  For those retirees who need to take a distribution from an IRA and do not need the funds to live on, a Qualified Charitable Distribution (QCD) may be an attractive strategy. 

A QCD is a tax-free withdrawal from an IRA, up to $100,000, made payable directly to a charitable organization.  This distribution can potentially satisfy your required minimum distribution as well as offer some tax advantages.

By doing so, this distribution is not included in your taxable income for the year (up to $100,000).  This could potentially eliminate or reduce the 3.8% Medicare surtax.  Not to mention that the reduction in taxable income could reduce Social Security benefit taxation, loss of tax credits, deductions, and other means-tested programs. 

Since the change in the tax laws a few years ago, the standard deduction was almost doubled, which eliminated a lot of itemizing for taxpayers.  This meant that their charitable gifting was sometimes not counted towards income reduction.  By taking a QCD, you can still use your standard deduction and gift to charity without increasing your taxable income, which would have otherwise counted with your RMD. 

There are some QCD requirements that you should be aware of:

  • You must be 70 ½ or older to make a QCD
  • QCDs can only be done for the current tax year.
  • The distribution must be transferred directly to a charity approved by the IRS
  • You cannot receive anything of value from the organization receiving your QCD (i.e. gifts, event tickets, etc).
  • Distributions from 401(k), 403(b), or 457(b) plans do not qualify for QCD treatment.


As always, check with your tax adviser for specific recommendations that are best for you.