Qualified Charitable Distributions (QCDs): A Powerful RMD Strategy

How charitable IRA transfers can satisfy required distributions while keeping qualifying income off the tax return

July 17, 2026

Required minimum distributions create an odd problem for charitably inclined retirees. The tax code requires money to leave a traditional IRA, even when the owner does not need the cash. The same retiree may already be writing checks to a church, school, ministry, hospital, or other charity. A Qualified Charitable Distribution, or QCD, can connect those two cash flows.

Instead of taking the IRA distribution personally, recognizing income, and then making a charitable gift, the IRA owner directs the IRA trustee to transfer the money to an eligible charity. If the rules are followed, the QCD can count toward the year's required minimum distribution, or RMD, while the qualifying amount is excluded from gross income. The charity receives the gift, the RMD is satisfied to that extent, and the retiree avoids putting the charitable portion of the IRA withdrawal on the taxable side of the return.

That is why I view the QCD as more than a charitable-giving technique. It is an income-planning tool. The idea is simple, but the execution matters. This piece is educational, and the specifics should be coordinated with your CPA, your IRA custodian, the charity, and Perissos before any transfer is initiated.

A QCD is generally a distribution made directly by an IRA trustee to an organization eligible to receive tax-deductible contributions. The IRA owner must have actually reached age 70 1/2 on the date of the transfer. Turning 70 1/2 later in the year is not enough for an earlier payment to qualify.¹

For 2026, an eligible individual may exclude up to $111,000 of QCDs from gross income. That is an aggregate annual limit across the individual's IRAs, not a separate limit for every account or every charity. A married couple can potentially exclude as much as $222,000 if both spouses are eligible and each makes QCDs from his or her own IRA. One spouse cannot use the other spouse's unused limit. The annual limit is indexed for inflation.^1,2

Traditional IRAs and inherited IRAs can be QCD sources when the individual making the distribution personally satisfies the age rule. A Roth IRA can technically be a source, but using tax-free Roth dollars often produces little or no incremental federal income-tax benefit. An ongoing SEP IRA or SIMPLE IRA generally cannot be used, and a distribution directly from a 401(k), 403(b), or other employer plan is not a QCD.¹ Any rollover strategy involving an employer plan must be reviewed before distributions occur because plan-level RMDs and rollover rules are separate.

The transfer must be direct. The trustee may send funds to the charity or issue a check payable to the charity under its QCD process, but a check payable to the IRA owner is a taxable distribution even if the owner immediately gives the money away. The donor must also obtain the same contemporaneous written acknowledgment required for a charitable gift, including confirmation that no goods or services were received in exchange.¹

The distinction between exclusion and deduction drives most of the value. A normal IRA withdrawal increases adjusted gross income, or AGI. An itemized charitable deduction may later reduce taxable income, but it generally does not remove the IRA withdrawal from AGI. A QCD keeps the qualifying distribution out of income at the front end.

For 2026, non-itemizers may deduct up to $1,000 of qualifying cash gifts, or $2,000 on a joint return. Taxpayers who itemize are also subject to a new floor that generally allows a charitable deduction only to the extent aggregate contributions exceed 0.5% of the taxpayer's contribution base.³ Those provisions can still provide value, but they are not equivalent to excluding a larger IRA distribution from income. Figure 1 puts the 2026 limits in context.

A lower AGI can have secondary effects. Medicare's income-related premium adjustment uses modified adjusted gross income from generally two years earlier, so a QCD made in 2026 may affect the Medicare premium determination for 2028 if the taxpayer is near a future threshold.⁴ Lower income may also reduce the portion of Social Security benefits exposed to federal income tax because that calculation begins with one-half of benefits plus other income, including tax-exempt interest.⁵ The result depends on the full return, but the important point is that a QCD works before these AGI-sensitive calculations rather than after them.

There is no double benefit. The amount excluded as a QCD cannot also be claimed as a charitable contribution deduction. That is not usually a disadvantage. The income exclusion is often the more useful benefit, particularly for a taxpayer taking the standard deduction or navigating an AGI-based threshold.¹

Figure 1: A QCD is an income exclusion, not an itemized deduction. For 2026, the annual QCD limit is $111,000 per eligible IRA owner, while the new non-itemizer cash charitable deduction is limited to $1,000 for single filers and $2,000 for joint filers.

The best candidate is someone who is at least age 70 1/2, already intends to give to charity, has pre-tax IRA assets, and does not need the entire RMD for living expenses. The strategy is especially attractive when annual gifts go directly to operating charities and when the taxpayer takes the standard deduction, receives only a partial benefit from itemizing, or is close to an AGI-sensitive tax or Medicare threshold.

The age gap between QCD eligibility and RMDs creates a useful planning window. Under current law, IRA owners born from 1951 through 1958 generally begin RMDs at age 73, while those born in 1960 or later generally begin at age 75.⁶ A taxpayer can therefore use QCDs after age 70 1/2 even before RMDs begin. That can reduce a pre-tax IRA balance while supporting charity, although it should be compared with Roth conversions and other multi-year tax strategies.

Inherited IRA beneficiaries can also benefit when they are personally old enough. A beneficiary facing annual distributions or a ten-year payout period may be able to direct qualifying inherited-IRA dollars to charity rather than adding those dollars to income. The inherited-account rules are fact-specific, so the beneficiary's age, the original owner's date of death, and any annual RMD obligation should all be confirmed.

By contrast, a QCD has less relative value for someone who does not have genuine charitable intent, needs the full distribution for spending, has mostly after-tax IRA basis, or would be better served donating appreciated securities. Tax savings should follow the charitable goal, not create it.

A QCD can count toward the RMD for the year as long as the distribution otherwise qualifies and is completed by the applicable deadline.¹ Suppose a retiree has a $40,000 RMD and plans to give $20,000 to eligible charities. If the retiree withdraws the full $40,000 personally and writes a $20,000 check from a bank account, the IRA generally adds $40,000 to income. The charitable gift may provide a deduction, but that depends on the deduction rules and the rest of the return.

If $20,000 instead goes directly from the IRA to charity as a QCD and the remaining $20,000 is distributed to the retiree, the same $40,000 RMD can be satisfied while only $20,000 of IRA income is included in AGI. Same gift. Same RMD. A different tax result. Figure 2 shows the arithmetic.

Timing is important because a distribution already paid to the IRA owner cannot be retroactively relabeled as a QCD. If the retiree has already taken the entire RMD personally, a later QCD can still qualify as a charitable distribution, but it does not undo the income from the earlier withdrawal. For recurring charitable gifts, I prefer to plan the QCD early in the year and track it alongside the remaining RMD.

The first-year RMD deadline also deserves attention. An IRA owner may delay the first RMD until April 1 of the following year, but that can place two RMDs in one tax year: the delayed first RMD and the regular second-year RMD due by December 31.⁶ A QCD plan should be coordinated with the correct RMD year, the charity's processing time, and the custodian's year-end cutoff.

Figure 2: In this illustration, the retiree has a $40,000 RMD and gives $20,000 to charity. Routing the gift through a QCD keeps $20,000 of IRA income out of AGI while still satisfying the same RMD obligation.

First, confirm the recipient. QCDs generally work for eligible public charities, including many religious, educational, medical, and community organizations. They generally cannot be made to donor-advised funds, private foundations, or supporting organizations.⁷ The charity's legal name and eligibility should be verified before the trustee issues the payment. A QCD also cannot purchase gala tickets, memberships, meals, or other benefits because the donor must be entitled to a full charitable deduction but for the QCD exclusion.

Second, confirm the account and the owner's age. The rule is based on the actual transfer date, not simply the calendar year in which someone turns 70 1/2. Employer plans do not qualify directly, ongoing SEP and SIMPLE IRAs are restricted, and an inherited-IRA beneficiary must satisfy the age requirement personally. When multiple IRAs or custodians are involved, the $111,000 annual limit must be tracked in the aggregate.¹

Third, leave time for completion. The transaction must be completed within the tax year. Custodians and charities often need time to issue, deliver, deposit, and acknowledge checks, so waiting until the final days of December creates unnecessary risk. The donor should retain the custodian's confirmation and the charity's written acknowledgment.

Fourth, coordinate tax reporting. An IRA distribution is reported on Form 1099-R, and the gross IRA distribution must still be shown on the tax return. Beginning with 2025 reporting, custodians use a specific Form 1099-R code for QCDs, but the return must still identify the qualifying amount and report the correct taxable amount. A tax preparer should receive a schedule listing each charity, payment date, and amount so the return can be reconciled to the year-end forms.^1,8

Fifth, check for deductible IRA contributions made after age 70 1/2. A cumulative anti-abuse rule can reduce the amount of an otherwise qualifying QCD that is excludable from income when the taxpayer has deducted IRA contributions for years in which the taxpayer was age 70 1/2 or older. Publication 590-B includes a worksheet for this adjustment.¹ This is easy to miss when one spouse is still working and contributing to an IRA.

Finally, coordinate cash flow and withholding. A QCD is not available to pay the donor's income tax, and no tax is withheld from the charitable portion. A retiree who has historically used RMD withholding for quarterly-tax management may need to take a separate taxable distribution, adjust withholding elsewhere, or make estimated payments.

There is also a specialized lifetime election that can permit a QCD to fund certain split-interest arrangements, such as a qualifying charitable gift annuity or charitable remainder trust. The 2026 limit for this one-time election is $55,000, and it sits within a much narrower set of statutory requirements.^1,2 This is not a routine year-end QCD and should be designed with the charity, the client's attorney, CPA, and advisory team.

A QCD is powerful, but it is not the automatic answer for every charitable dollar. Appreciated securities held in a taxable account may be better candidates when donating them directly can avoid an embedded capital gain and potentially produce a fair-market-value deduction. A donor-advised fund can also be useful when a family wants to bunch deductions in a high-income year and make grants over time, even though the donor-advised fund itself cannot receive a QCD.

Large charitable plans may call for a coordinated mix: QCDs for recurring annual gifts, appreciated assets for larger gifts, and estate or trust planning for long-term legacy goals. State tax treatment, portfolio concentration, liquidity, basis, and the donor's itemizing position all matter. The correct comparison is not QCD versus charity. It is QCD versus the other ways the same charitable goal could be funded.

For the right retiree, a QCD is one of the cleanest RMD strategies available. It directs pre-tax IRA dollars to a cause the client already supports, satisfies the RMD to that extent, and keeps the qualifying amount out of income. The benefit can extend beyond the federal bracket because AGI affects other parts of the retirement tax picture.

The takeaway: decide which charities you intend to support, confirm eligibility, and then determine which account should fund the gift. When the answer is the IRA, plan the transfer early, document it carefully, and coordinate the reporting. Tax-aware planning works best when the charitable goal comes first and the mechanics are handled before year-end.

All my best,

Brandon VanLandingham, CFA, CMT, CFP

Founder / CIO

Net Investment Income Tax (NIIT): What Triggers It and How to Plan

Reducing Capital Gains on a Highly Appreciated Portfolio

Section 453, the Installment Sale, and the "453 Trust"

This piece is educational. It is not legal, tax, or accounting advice and is not a recommendation to take or refrain from any specific action. Tax law is fact-specific and changes regularly. Please coordinate any decisions discussed here with your attorney, your CPA, and Perissos before acting.

Perissos Private Wealth Management is a Registered Investment Adviser ("RIA"). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Perissos Private Wealth Management renders individualized investment advice to persons in a particular state only after complying with the state's regulatory requirements, or pursuant to an applicable state exemption or exclusion. All investments carry risk, and no investment strategy can guarantee a profit or protect from loss of capital. Past performance is not indicative of future results.

The information contained in this newsletter is intended to provide general information about market themes. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services is given solely to provide education regarding our investment philosophy and our strategies. You should not rely on any information provided in making investment decisions.

Market data, articles and other content in this material are based on generally available information and are believed to be reliable. Perissos Private Wealth Management does not guarantee the accuracy of the information contained in this material.

Perissos Private Wealth Management will provide all prospective clients with a copy of our current Form ADV, Part 2A (Disclosure Brochure), Part 2B (Supplemental Brochures), and Part 3 (Client Relationship Summary) prior to commencing an advisory relationship. You can also view these documents at any time at adviserinfo.sec.gov or by contacting us requesting a copy.

1. Internal Revenue Service, Publication 590-B, "Distributions from Individual Retirement Arrangements (IRAs)," Qualified charitable distributions. https://www.irs.gov/publications/p590b 2. Internal Revenue Service, Notice 2025-67, "2026 Amounts Relating to Retirement Plans and IRAs." https://www.irs.gov/pub/irs-drop/n-25-67.pdf 3. Internal Revenue Service, Publication 505 (2026), "Tax Withholding and Estimated Tax," charitable contribution changes for 2026. https://www.irs.gov/publications/p505 4. Social Security Administration, Social Security Handbook Section 2504, "Description of the Medicare Income-Related Monthly Adjustment Amount Determination Process." https://www.ssa.gov/OP_Home/handbook/handbook.25/handbook-2504.html 5. Internal Revenue Service, Publication 17 (2025), "Your Federal Income Tax," taxation of Social Security benefits. https://www.irs.gov/publications/p17 6. Internal Revenue Service, Retirement Plan and IRA Required Minimum Distribution FAQs; and final RMD regulations, T.D. 10001. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs and https://www.irs.gov/irb/2024-33_IRB 7. U.S. House of Representatives, Office of the Law Revision Counsel, 26 U.S.C. Section 408(d)(8), "Distributions for charitable purposes." https://uscode.house.gov/view.xhtml?req=(title:26%20section:408%20edition:prelim) 8. Congressional Research Service, "Qualified Charitable Distributions from Individual Retirement Accounts (IRAs)," updated January 15, 2026. https://www.congress.gov/crs-product/IF11377