Every January, financial advisors field the same question from clients over 70½: should I write a check to my favorite charity?
The better answer, tax-wise, is almost always no — and it has been sitting in the tax code since 2006.
It's called a qualified charitable distribution, or QCD.
Instead of donating cash from your checking account, you ask your IRA custodian to send money directly to a charity.
The amount counts toward your required minimum distribution but never shows up as income on your tax return.
That last part matters more than it sounds.
A 72-year-old who pulls $10,000 from an IRA and then donates $10,000 to charity gets no tax benefit for the donation unless they itemize — and after the 2017 tax law raised the standard deduction, most retirees don't itemize anymore.
The QCD route skips that problem entirely.
The cap is $105,000 per person in 2024, $108,000 in 2025, and it's indexed for inflation.
The money must go straight from the IRA to the charity — if it touches your bank account first, the trick is dead.
And it only works with traditional IRAs and inactive 401(k)s rolled into one, not Roth IRAs or 401(k)s still tied to an employer.
Some charge fees, some bury the form, and some phone representatives still don't know the rules.
Vanguard, Fidelity, and Schwab all support QCDs, but the process varies enough that you should call and confirm before assuming it's simple.
Charities, meanwhile, have little incentive to advertise this.
Your brokerage also earns nothing when you move money out of an IRA, which is one reason the option stays quiet — there's no commission in telling you about it.
The people who benefit most are retirees who don't need the IRA money but are forced to take RMDs anyway.
If you're in that group, a QCD can shave taxable income, which can lower Medicare premium surcharges and reduce the taxable portion of Social Security.
Those knock-on effects often save more than the donation itself.
Donor-advised funds don't qualify — the money has to go to a public charity.
Private foundations generally don't qualify either.
And you can't double-dip by claiming the same donation as an itemized deduction.
If you're married, each spouse has their own $105,000 limit, but you can't combine them into one $210,000 gift from a single IRA.
One more wrinkle: the deadline is December 31, and custodians get swamped.
A request submitted December 28 may not process until January, killing the deduction for that tax year.
Advisors consistently say to start the paperwork in early December, not the last week.
It's a deliberate piece of tax policy that rewards charitable giving from retirement accounts.
But it's also a reminder that the tax code quietly favors people who read the fine print — and quietly ignores everyone else.
The honest take: if you're over 70½, charitably inclined, and taking RMDs you don't need, ask your custodian about this before you write another check.
Final Thoughts
Just don't expect anyone to bring it up for you.