Retirees who give to charity may be leaving money on the table — or handing some to the IRS unnecessarily.
A rule called the qualified charitable distribution lets people 70½ and older move money straight from an IRA to a charity, and that transfer never counts as taxable income.
Required minimum distributions, or RMDs, kick in at 73 for most retirees.
Once you hit that age, the government forces you to pull money out of tax-deferred retirement accounts whether you need it or not — and that withdrawal gets added to your taxable income.
That higher income can trigger a domino effect.
It may push you into a higher bracket, increase what you pay for Medicare premiums, and make more of your Social Security benefits taxable.
A qualified charitable distribution sidesteps much of that because the money goes directly to the charity and never appears on your tax return as income.
The mechanics are simple, but the details trip people up.
The transfer must go directly from your IRA custodian to the charity — you can't withdraw the cash yourself, then write a check.
If you touch the money first, it becomes a taxable distribution, and the tax break is gone.
As of 2025, you can move up to $108,000 per person per year this way, an amount that adjusts for inflation.
A couple with separate IRAs could each use the full limit.
One change worth knowing: starting in 2024, the limit got a one-time bump for people 70½ and older, and the cap is now indexed to inflation going forward.
Charitable giving through this route is also allowed to fund certain split-interest entities, though the rules there are more complex.
Anyone who is chartered to take RMDs and already donates to a church, school, or nonprofit.
Instead of taking the RMD, paying tax on it, and then donating whatever's left, you send the gift straight from the IRA.
The charity gets the full amount, and the IRS gets nothing on that portion.
It can also help people who don't itemize.
Since the 2017 tax law raised the standard deduction, many retirees no longer get a write-off for charitable gifts.
A qualified charitable distribution works regardless of whether you itemize, which makes it one of the few giving strategies left for non-itemizers.
Not every account qualifies — this applies to traditional IRAs and inherited IRAs, not 401(k)s or ongoing employer plans.
You'll want to confirm your custodian can process the transfer and get it done before year-end.
And you should keep documentation, since charities aren't always required to send the same paperwork as a normal donation.
Rules like this reward people who plan, and they quietly punish those who don't.
Final Thoughts
If you're near 70½ and give regularly, a short call to your IRA custodian could keep more money in your pocket and more in the hands of the cause you care about.