Overview
A Qualified Charitable Distribution (QCD) is a direct transfer of money from your IRA straight to a qualified charity — the funds never pass through your hands. Available starting at age 70½, a QCD can satisfy some or all of your Required Minimum Distribution while being completely excluded from your taxable income.
Why It Matters
A QCD isn't a deduction — it's an exclusion. That distinction matters enormously in 2026. Under OBBBA, itemized charitable deductions are now reduced by a 0.5%-of-AGI floor, and the value of itemized deductions for top-bracket filers is capped at 35 cents per dollar rather than the full marginal rate. A QCD sidesteps both limits entirely, and it works even if you take the standard deduction (which most retirees now do, given the higher OBBBA standard deduction). It also lowers your MAGI, which can help you avoid IRMAA surcharges and reduce the taxable portion of your Social Security.
How It Works
- You must be 70½ or older at the time of the distribution (note: this is younger than the RMD start age of 73 — you can use QCDs for three years before RMDs even begin).
- The transfer must go directly from the IRA custodian to a qualified 501(c)(3) — donor-advised funds and private foundations don't qualify.
- The distribution counts toward that year's RMD once you're of RMD age, but a QCD larger than your RMD doesn't carry forward to reduce next year's requirement.
- Only IRAs qualify (traditional, inherited, inactive SEP, inactive SIMPLE) — 401(k)s do not; you may need to roll funds into an IRA first if this strategy matters to you.
2026 Key Numbers
- Annual QCD limit: $111,000 per person ($222,000 for a couple, each spouse using their own IRA), up from $108,000 in 2025.
- One-time lifetime option: up to $55,000 of a QCD can fund a Charitable Remainder Trust or Charitable Gift Annuity, giving you an income stream while still keeping the assets out of your taxable estate.
- Deadline: must be completed by December 31 of the tax year — no extensions, and custodian processing time can take days to weeks, so don't wait until late December.
- Alternative for smaller gifts: OBBBA's new non-itemizer charitable deduction ($1,000 single / $2,000 joint) may be simpler if your giving is modest and you don't need the full QCD mechanism.
Common Mistakes
- Taking the distribution to yourself first and then writing a personal check to the charity — this disqualifies it as a QCD entirely
- Donating to a donor-advised fund or private foundation, which don't qualify
- Waiting until the last week of December, when custodian processing delays can push the transfer into the next tax year
- Not getting a contemporaneous written acknowledgment from the charity — required documentation if the IRS asks
Sources
- Fidelity — Qualified Charitable Distributions (QCDs)
- Charles Schwab — Reducing RMDs With QCDs in 2026
- Congress.gov CRS Report IF11377 — Qualified Charitable Distributions from IRAs
- Northern Trust — Qualified Charitable Distributions from IRAs
This is general education, not personalized tax advice. Confirm charity eligibility and custodian process with your IRA provider and a tax professional.