A QCD sends money directly from an IRA to a public charity at age 70½ or older, counts toward your RMD, and is excluded from taxable income entirely, unlike a regular itemized deduction.
Why this matters two to eight years from retirement
Once RMDs begin (at 73, or 75 if you were born in 1960 or later), they arrive whether you want the income or not, and every dollar raises AGI, which can raise your IRMAA tier and the taxable share of Social Security. A QCD lets a charitably inclined household route part or all of that forced withdrawal straight to a cause they already support, satisfying the RMD without the downstream tax effects a cash withdrawal would trigger. For a household that gives every year regardless, this is close to a free option: the giving already happens, and the only question is which dollars fund it.
What this looks like for one IRA owner
In 2024, the QCD limit was $105,000 per person; the IRS raised it to $108,000 for 2025, and the limit now rises with inflation each year. An IRA owner with a $40,000 RMD who already gives $15,000 a year to a church can direct that $15,000 as a QCD instead of writing a check from a bank account. A donor-advised fund cannot receive a QCD, so the money has to go straight to a public charity such as the church. The QCD satisfies $15,000 of the RMD and never shows up as income; the remaining $25,000 is withdrawn and taxed as usual. The household’s charitable habit stays the same. Its tax return does not. These figures are illustrative of the mechanism, not a specific recommendation.
The age gap that catches people off guard
QCDs are available starting at 70½. RMDs do not begin until 73, or 75 for anyone born in 1960 or later. That gap of two and a half to four and a half years is easy to miss: someone 71 years old with no RMD obligation yet can still make a QCD, and doing so before forced withdrawals start shrinks the balance the future RMD formula applies to. Starting with 2025 tax returns, IRA custodians report a QCD under its own code, Code Y, on Form 1099-R, which makes it easier to confirm the transfer was reported the way it was intended.
Related reading
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