If you are 70½ or older and have money sitting in a traditional IRA, there is a tax move that many retirees overlook.
It is called a qualified charitable distribution, or QCD, and it lets you send money straight from your IRA to a charity.
The best part: that withdrawal never shows up as taxable income.
Once you hit 73, you generally have to take required minimum distributions from your traditional IRA whether you need the cash or not.
That RMD gets added to your taxable income, which can nudge you into a higher bracket and raise what you pay for Medicare premiums.
A QCD can satisfy part or all of that RMD without adding a dollar to your reported income.
The mechanics are simple, but the details trip people up.
You must be at least 70½ on the day of the gift, and the money has to move directly from your IRA to the charity.
If you withdraw it yourself first and then write a check, the IRS treats it as a normal taxable distribution.
Ask your custodian for the right form, and keep the receipt from the charity.
For 2025, you can give up to $108,000 per person through QCDs, and that cap is indexed for inflation.
A married couple with separate IRAs can each use the full limit, doubling the household total.
The gift counts toward your RMD, so you can check two boxes with one transfer.
Why not just donate cash and claim a deduction?
Many retirees take the standard deduction, which for 2025 is $15,000 for single filers and $30,000 for married couples filing jointly.
If you do not itemize, a cash donation gives you no tax break at all.
A QCD works whether you itemize or not, because it keeps the money out of your income in the first place.
One newer option worth knowing: starting in 2023, you can make a one-time QCD of up to $54,000 to a split-interest entity like a charitable gift annuity.
That can create a stream of payments back to you while supporting a cause.
It is a one-shot deal per lifetime, so talk it through with a tax pro before committing.
The charity must be a qualified 501(c)(3) and cannot be a private foundation or a donor-advised fund.
You cannot use a QCD to fund a gift you already pledged, and you get no charitable deduction for the amount you give.
Also, QCDs come out of your IRA before other withdrawals count toward your RMD, so the order of operations matters.
If you are charitably inclined and have a traditional IRA, this is one of the cleanest ways to give.
It lowers taxable income, can protect your Medicare premiums, and puts money where you want it.
Set it up early in the year so the transfer clears before any deadlines sneak up.
The takeaway is straightforward: if you are 70½ or older and plan to donate anyway, run the numbers on a QCD before you write a check.
A short conversation with your IRA custodian and your tax preparer could save you more than the gift itself costs.
Final Thoughts
It is a rare case where generosity and tax planning point in the same direction.