If you’re over age 70½ and charitably inclined, Qualified Charitable Distributions (QCDs) are one of the most efficient ways to give. A properly executed QCD can satisfy all or part of your Required Minimum Distribution (RMD) without increasing your Adjusted Gross Income (AGI).

Lower AGI means potential savings on Medicare IRMAA, Social Security taxes, and other income-based deductions. Here’s a plain-English guide to using a QCD before year-end.

Quick note: This is general education only. Coordinate with your tax professional before taking action.

QCD Basics: What, Who, and How Much

What it is:
A direct transfer from your IRA to a qualified public charity.

Who qualifies:
IRA owners and IRA beneficiaries who are age 70½ or older on the date of the distribution.

Annual limit:
Up to the annual QCD limit per person, per year. (Confirm the current indexed amount with your advisor or custodian.)

Eligible accounts:

Traditional IRAs and inherited IRAs
SEP and SIMPLE IRAs only if there are no employer contributions made for that year
Not allowed from 401(k)/403(b) accounts unless rolled into an IRA first (timing is crucial)

Eligible charities:
501(c)(3) public charities.
(Not donor-advised funds, supporting organizations, or private foundations.)

Why QCDs Are Powerful

1. They satisfy RMDs without raising your income.
A QCD counts toward your RMD but doesn’t show up in your taxable income.

2. Lower income means fewer AGI ripple effects.
This can help you:

Avoid higher Medicare IRMAA brackets
Reduce taxation of Social Security
Limit income-based phase-outs

3. You benefit even if you don’t itemize.
Unlike regular charitable deductions, QCDs give you a tax benefit outside the itemized deduction system.

How QCDs Compare to Other Giving Strategies

Cash gifts (from checking):
Helpful, but you only benefit if you itemize. Your RMD still increases AGI.

Gifting appreciated securities:
Excellent when itemizing because you can avoid capital gains. But it does not lower AGI like a QCD does.

Donor-advised funds (DAFs):
Useful for bunching deductions, but DAFs cannot receive QCDs.

Step-By-Step: How to Execute a QCD

1. Confirm your eligibility and remaining RMD.

You must be 70½+ on the date of the transfer.

2. Choose the charity.

Verify charity status (501(c)(3)) and confirm they can process IRA gifts.
Obtain their QCD receiving instructions.

3. Contact your IRA custodian.

Request a direct transfer payable to the charity.
You should never take possession of the funds.

4. Provide complete instructions:

Charity’s legal name and EIN
Mailing address + “Attention: Development Office”
Your name/contact info
Note: “Qualified Charitable Distribution from IRA”

5. Watch the timing.

Transfers must clear by December 31 to count for this year.
Mail checks early; electronic transfers process faster.

6. Keep your paperwork:

Custodian confirmation of the QCD amount
Charity acknowledgment letter stating no goods or services were received
Your year-end RMD statement

7. Report correctly at tax time.

Your Form 1099-R will show a normal distribution.
You (or your preparer) must report the taxable amount as zero for the QCD portion and note “QCD.”

Common Mistakes to Avoid

Taking your RMD first and trying to “convert it” into a QCD (you can’t).
Making the check payable to yourself—it must be custodian-to-charity.
Sending money to a donor-advised fund or private foundation (not eligible).
Missing the charity acknowledgment letter.
Waiting until the final week of December—processing delays are real.

Who Benefits Most from QCDs

Retirees with RMDs who don’t itemize charitable deductions
Anyone near a Medicare IRMAA threshold
Donors who support the same charities annually and want a simple, repeatable system

When Another Giving Strategy May Be Better

You hold highly appreciated stock and plan to itemize.
You want to bunch deductions in a high-income year (DAF strategy).
Your preferred charity cannot process QCDs promptly this year.

Mini-Scenarios

Scenario 1:
RMD = $24,000
Annual giving = $10,000
→ A $10,000 QCD satisfies part of your RMD and keeps AGI lower than if you wrote a $10,000 check from your bank.

Scenario 2:
You’re on the edge of an IRMAA bracket.
→ A $5,000 QCD instead of a $5,000 bank gift may keep you under the surcharge line.

Scenario 3:
Inherited IRA beneficiary, age 72.
→ You can use QCDs from the inherited IRA, subject to annual limits.

Year-End QCD Checklist

Confirm your RMD amount
Verify the charity’s status and acceptance policy
Submit your QCD request to the custodian by mid-December
Obtain acknowledgment letter
Save all confirmations for your tax preparer

With the right timing and paperwork, a QCD can reduce taxes, satisfy your RMD, and support your favorite charities in one move. But missteps—like waiting too long or using the wrong account—can undo the benefits. Reviewing your plan with your advisor now ensures your year-end giving is smooth, compliant, and as tax-efficient as possible.

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How Qualified Charitable Distributions (QCDs) Can Cut Taxes and Satisfy Your RMD