How to maximize giving impact with qualified charitable distributions

If you are looking for a tax-efficient way to support the causes you care about, qualified charitable distributions (QCDs) are one of the most powerful tools available to eligible donors. 

What is a qualified charitable distribution?

A qualified charitable distribution (QCD) is a direct transfer of funds from an individual retirement account (IRA) to an eligible nonprofit organization.  

Unlike a standard IRA withdrawal, a QCD is excluded from your taxable income — meaning you receive a tax benefit even if you do not itemize deductions on your federal tax return. 

Who is eligible?

To make a QCD, you must meet the following criteria: 

1. You must be 70.5 or older.
2. The distribution must come directly from a traditional IRA or an inherited IRA. Contributions from 401(k) and 403(b) plans do not qualify, but their funds may potentially be rolled over to an IRA first.
3. The receiving organization must be a qualifying 501(c)3 nonprofit. Donor-advised funds and private foundations do not qualify.
4. The maximum annual QCD limit per individual is $111,000 in 2026. Married couples can each make a QCD up to this limit from their respective IRAs.

Key tax benefits of QCDs 

QCDs offer several meaningful advantages over traditional charitable giving methods: 

1. Reduces your taxable income

The amount of a QCD is excluded from your gross income. This can lower your adjusted gross income (AGI), which in turn may reduce Medicare Part B and Part D premiums, lower the taxable portion of your Social Security benefits, and help you avoid certain income-based surcharges. 

2. Satisfies required minimum distributions (RMDs)

If you are 73 or older and subject to required minimum distributions from your IRA, a QCD can count toward satisfying all or part of your RMD for the year. Since the RMD would otherwise be added to your taxable income, directing it to charity via a QCD is an efficient way to meet this obligation. 

3. Benefits even non-itemizers

Since the Tax Cuts and Jobs Act of 2017 significantly raised the standard deduction, the majority of taxpayers no longer itemize. This means a typical cash charitable gift does not reduce taxable income for most donors. A QCD sidesteps this entirely because the tax exclusion applies at the income level, not the deduction level. 

How to make a QCD

1. Contact your IRA custodian (brokerage or bank) and request a direct transfer to the charity of your choice. Many custodians have a QCD request form or online process.
2. Provide the charity’s name, address, and Tax ID (EIN). The check should be made payable directly to the organization, not to you.
3. Confirm the transfer is completed within the same calendar year you intend to claim it.
4. Request a written acknowledgment from the charity for your records.
5. Report the QCD on your federal tax return. Your IRA custodian will include the distribution on a 1099-R, but you must indicate the QCD amount on your return so it is excluded from taxable income.

If you are looking for a trusted local organization that meets QCD eligibility requirements, consider directing your distribution to The Local Change Foundation. Local Change supports scholarships and grants to deserving students and nonprofits across the Front Range. 

Frequently asked questions

Can I make a QCD if I am still working and contributing to my IRA? 

Yes, as long as you are 70.5 or older. Active contributions to a traditional IRA do not disqualify you from making a QCD, though the rules around the deductibility of any IRA contributions in the same year can be complex. Consult a tax advisor for specific guidance. 

Is there a minimum QCD amount? 

There is no IRS-mandated minimum. However, your IRA custodian may have their own minimum transfer thresholds, so it’s worth checking in advance. 

Can I split my QCD among multiple charities? 

Yes. You may direct a single year’s QCD to multiple qualifying charities, as long as the combined total does not exceed the annual limit.