If you are 70½ or older and you have an IRA, there is a tax move that many retirees never hear about until it is too late.
It is called a qualified charitable distribution, or QCD, and it lets you send money straight from your IRA to a charity.
Normally, when you take money out of a traditional IRA, that withdrawal counts as taxable income.
The money moves directly from your account to the charity, and it never shows up as income on your return.
Extra income can push you into a higher bracket.
It can raise the taxable portion of your Social Security.
It can lift your Medicare Part B and Part D premiums two years later through income-related adjustment amounts.
A QCD can keep those dominoes from falling. ## The basics you need to know You must be at least 70½ years old on the day of the transfer.
The charity must be a qualified 501(c)(3) organization, and the money has to go directly from the IRA custodian to the charity.
If you take the cash first and write a check, the IRS treats it as a normal taxable withdrawal.
For 2025, you can give up to $108,000 per person through QCDs.
That limit is indexed for inflation, so it tends to rise over time.
A married couple with separate IRAs can each use the full amount.
One catch: QCDs count toward your required minimum distribution, but only the part that is actually transferred.
If your RMD is $40,000 and you send $15,000 to charity, you still need to withdraw the remaining $25,000. ## Why this is getting more attention More retirees are sitting on larger IRAs than previous generations, partly because of years of strong market returns.
At the same time, the standard deduction has grown, which means fewer people itemize.
If you do not itemize, a normal charitable deduction does you little good.
Once you turn 73, required minimum distributions kick in for most people.
Those withdrawals are taxable whether you need the money or not.
A QCD is one of the few ways to satisfy that requirement while keeping the amount out of your taxable income. ## The details that trip people up Not every account works.
QCDs apply to traditional IRAs and inherited IRAs in many cases, but not to 401(k)s, 403(b)s, or most other workplace plans while you are still working.
You can roll money from those plans into an IRA first, but that takes planning.
Donor-advised funds and private foundations generally do not count.
Your IRA custodian should provide a statement showing the distribution went to the charity.
You will also want a receipt from the organization.
The IRS expects documentation if questions come up.
Transfers must be completed by December 31 to count for that tax year.
Do not wait until the last week of December, when custodians get swamped and paperwork slows down. ## A closing thought A QCD is not a loophole or a gimmick.
It is a plain rule that lets you move money to a cause you care about while avoiding a tax hit you would otherwise owe.
If you are charitably inclined and have a traditional IRA, it is worth a call to your custodian and your tax preparer before the year runs out.
Final Thoughts
Small moves made early often beat big moves made in a hurry.