QCDs & RMDs

Welcome to the Retirement Learning Center’s (RLC’s) Case of the Week. Our ERISA consultants regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans, and other types of retirement savings and income plans, including nonqualified plans, stock options, Social Security, and Medicare. This is where we highlight the most relevant topics affecting your business. A recent call from a financial advisor in Pennsylvania is representative of a common question on qualified charitable distributions from IRAs.

“Can you remind me what the tax benefits of a qualified charitable distribution from an IRA are?”

Highlights of the discussion

IRS rules permit IRA owners to make distributions to certain charities of the owners’ choosing, known as “Qualified Charitable Distributions,” or QCDs. If the requirements of a QCD are met, an IRA owner can use IRA funds to support a charitable purpose while also enjoying certain tax benefits.

If a distribution qualifies as a QCD, the amount of the distribution will be excluded from the IRA owner’s gross income. Moreover, a QCD can count towards any required minimum distribution (RMD) due for the year.

There are limits on the amount of a QCD. For 2026, the general limit is $111,000 annually per person (up from $108,000 in 2025). Married couples who file their taxes jointly, if both meet the applicable requirements and have separate IRAs, can donate up to $222,000 combined for 2026. There is also an additional one-time QCD permitted to charitable split-interest entities (i.e., charitable gift annuities, charitable remainder unitrusts, and charitable remainder annuity trusts due to SECURE Act 2.0. In 2026, the maximum QCD to a split-interest entity is $55,000 (up from $54,000 in 2025).

To constitute a QCD, a distribution must meet all of the following requirements.

The distribution (up to the limit) must be an otherwise taxable distribution from a traditional IRA. However, a QCD cannot be made from an IRA that is part of an ongoing SEP or SIMPLE IRA plan. Such plans are considered “ongoing” if the employer contributes to the SEP or SIMPLE IRA for the plan year ending with or within the IRA owner's taxable year of the QCD.

The IRA owner (or IRA beneficiary) must be age 70½ or older as of the date of the distribution.

The IRA trustee or custodian must transfer the QCD directly to an eligible charity that is qualified under IRC §170(b)(1)(A). Certain charitable organizations, such as private foundations, are not eligible to receive QCDs. If the distributed funds are given first to the IRA owner and then to a charity, the distribution will not qualify as a QCD.

The IRA trustee or custodian will issue a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., with code Y in box 7 “QCD,” along with Code 7 for a QCD from a noninherited IRA, Code 4 for a QCD from an inherited IRA, or Code K for a QCD reporting distributions of traditional IRA assets not having a readily available FMV that are either from non-inherited or inherited IRAs.

The donated funds must otherwise qualify for a charitable deduction. However, the IRA owner may not also claim a personal tax deduction for the QCD. An IRA owner may make a QCD even if they do not itemize their deductions.

The IRA owner must obtain a written acknowledgment from the charity that documents the specifics of the QCD (see IRS Publications 590-B and 526).

Conclusion

If the requirements of a QCD are met, an IRA owner or beneficiary can use IRA funds to support a charitable purpose while also enjoying certain tax benefits. For more details, see a report from the Congressional Research Service: Qualified Charitable Distributions from Individual Retirement Accounts (IRAs).