The Better Way to Give From an IRA

Why a Qualified Charitable Distribution can beat writing the same check from a taxable account

June 3, 2026

Charitable giving is usually framed as a deduction question: write the check, keep the receipt, and see whether the gift helps on Schedule A. For retirees with traditional IRA dollars, I think that framing often starts in the wrong place.

The better question is not, "Can I deduct the gift?" The better question is, "Which account should fund the gift?" For many charitably inclined retirees, the answer is the IRA, through a Qualified Charitable Distribution, or QCD.

One clarification up front: QCD stands for Qualified Charitable Distribution, not Qualified Charitable Deduction. That wording matters. A deduction reduces taxable income after income has already shown up on the return. A properly executed QCD can keep the IRA distribution out of income in the first place. That is a cleaner tax result, and in many cases it is more valuable than the charitable deduction itself.

This piece is educational. It is not legal or tax advice for a specific return. QCDs should be coordinated with your CPA, your tax preparer, the IRA custodian, and the charity before anything is sent.

A QCD is a direct transfer from an IRA trustee to an eligible charity. The IRA owner must be at least age 70 1/2 when the distribution is made, and the distribution generally must come from an IRA other than an ongoing SEP IRA or SIMPLE IRA. For 2026, the maximum annual QCD amount excluded from gross income is $111,000 per individual. If both spouses are eligible and each has an IRA, each spouse can use his or her own limit.^1,2

The mechanics are important. The check cannot be paid to you first, deposited into your bank account, and then forwarded to the charity. That is just a taxable IRA distribution followed by a charitable gift. To qualify as a QCD, the money has to move directly from the IRA to the eligible organization. You should also get the same written acknowledgment from the charity that you would need for a deductible charitable contribution.¹

The QCD is not a second bite at the apple. If the IRA distribution is excluded from income as a QCD, you do not also claim a charitable contribution deduction for that same excluded amount.¹ That sounds like a drawback until you look at how the math works. The exclusion is usually the better benefit.

Traditional IRA dollars are some of the least tax-friendly dollars on a retiree's balance sheet. When they come out, they are generally taxed as ordinary income. They do not get the preferential long-term capital-gain rate. They do not get qualified-dividend treatment. And if the IRA owner dies with a large pre-tax balance, heirs often inherit a tax problem along with the account.

A taxable brokerage account is different. It may hold cash, bonds, mutual funds, ETFs, or appreciated stock. Some assets may receive capital-gain treatment. Some may be eligible for a step-up in basis at death. Some may be useful for liquidity or for gifting appreciated securities directly. In other words, taxable-account dollars often have more planning flexibility than pre-tax IRA dollars.

That is why I usually view annual charitable giving as a chance to spend down the "tax-heavy" asset first. If a client is already giving $10,000, $25,000, or $50,000 per year to church, a ministry, a school, or another operating charity, and that client is old enough to use a QCD, the IRA is often the first pocket I want to examine.

For context, the charitable deduction from a taxable account only helps if the taxpayer itemizes, subject to the applicable limits. Beginning in 2026, a taxpayer who does not itemize may deduct up to $1,000 of certain cash contributions, or $2,000 on a joint return.³ That is useful, but it is not the same thing as excluding a much larger IRA distribution from income. Figure 1 shows the difference in scale.

It is a bit like deciding which drawer to empty first. Both drawers hold money, and either drawer can fund the same gift. But one drawer contains dollars that are waiting to be taxed as ordinary income. If we can use those dollars for charity without letting them pass through your income line, that is usually the cleaner choice.

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 biggest benefit of a QCD is not always the federal tax bracket. It is the adjusted gross income line.

A normal IRA withdrawal increases adjusted gross income. A charitable deduction may reduce taxable income, but it generally does not erase the AGI that was created by the withdrawal. That distinction can matter more than people expect because AGI is the starting point for several other tax and benefit calculations.

Medicare is the most obvious example. Social Security uses modified adjusted gross income, generally adjusted gross income plus tax-exempt interest, to determine whether a retiree pays an income-related monthly adjustment amount for Medicare Part B and Part D. For 2026, the first income-related premium tier starts above $109,000 for an individual filer and above $218,000 for a married couple filing jointly.⁴ A taxable IRA withdrawal can push a retiree closer to that line. A QCD can satisfy charitable intent without creating the same AGI.

Social Security taxation is another example. The IRS looks at one-half of your Social Security benefits plus your other income, including tax-exempt interest, to determine whether part of your benefit is taxable.⁵ A taxable IRA distribution can make more of the benefit taxable. A QCD does not enter that formula in the same way because the qualifying IRA distribution is excluded from income.

The takeaway: a charitable deduction works below the AGI line. A QCD works before the AGI line. That is why the QCD can have a broader impact than the deduction for the same gift.

The required minimum distribution rules are where the QCD becomes especially useful.

Once required minimum distributions begin, a traditional IRA owner has to pull a calculated amount out each year whether the cash is needed or not. The QCD lets charitable giving satisfy all or part of that RMD while keeping the charitable portion out of taxable income.¹ This is the central advantage over writing a check from a taxable account.

Let's look at a simple example. Suppose a retiree has a $40,000 RMD and gives $20,000 to charity every year. If the retiree takes the full $40,000 RMD personally and then writes a $20,000 check from a taxable account, the IRA still produced $40,000 of income. The charitable gift may or may not produce a full offset, depending on itemizing and deduction limits.

If the retiree instead sends $20,000 directly from the IRA to charity as a QCD and takes only the remaining $20,000 personally, the full $40,000 RMD can be satisfied, but only $20,000 of IRA income is included in AGI. Same charity. Same total RMD obligation. Very different tax return. Figure 2 shows the basic arithmetic.

Sequence matters. If the RMD has already been paid to you personally, a later charitable gift from your bank account cannot be retroactively converted into a QCD. For clients who give consistently, we want the charitable IRA transfers planned early enough in the year that they are part of the RMD strategy, not an afterthought in December.

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.

The QCD is powerful, but it is not always the best charitable tool.

The most common exception is appreciated securities in a taxable account. If you own stock, mutual funds, or ETFs with a large unrealized gain, donating the appreciated asset directly to a qualified charity can avoid the capital gain and potentially create a fair-market-value charitable deduction, subject to the applicable rules and limits. That can be better than giving cash, and sometimes it can be better than a QCD.

Another exception is donor-advised fund planning. Many families like donor-advised funds because they can bunch deductions in a high-income year, invest the charitable account, and recommend grants over time. A QCD is generally designed for direct gifts to eligible charities, not for funding every charitable vehicle. If the goal is to fund a donor-advised fund, a taxable-account gift may be the right tool.

Age matters too. A client younger than 70 1/2 cannot use a QCD yet. And account type matters. A traditional 401(k) is not automatically a QCD source; the usual path is IRA-based. Roth IRA owners should also be cautious. Roth dollars are already among the most tax-efficient assets a retiree can own, so I would usually rather preserve Roth assets and use pre-tax IRA dollars for charitable giving if both are available.

The point is not that the QCD replaces every other charitable strategy. It is that for recurring gifts to operating charities, once the client is eligible, the IRA deserves to be tested first.

There are a few guardrails I would keep on the checklist.

First, verify the charity is eligible before initiating the transfer. A gift to an individual is not deductible, and not every charitable-looking destination works for QCD purposes. The safest practice is to coordinate with the charity and the custodian before the check is issued.

Second, make the transfer direct. The IRA custodian should send the funds to the charity, or issue a check payable to the charity under the custodian's approved QCD process. A check made payable to you is not a QCD.

Third, keep the paperwork. The tax reporting can be unintuitive because IRA distributions are reported on Form 1099-R. Your tax preparer needs to know which portion was a QCD so the return reports the gross IRA distribution and the correct taxable amount. The charity's acknowledgment should confirm the gift and whether any goods or services were provided in exchange.

Fourth, do not take a charitable deduction for the excluded QCD amount. The benefit is that the IRA income is left off the taxable side of the return. Trying to deduct it again is double counting.

Finally, be careful with deductible IRA contributions made after age 70 1/2. The IRS has an offset rule that can reduce the amount of a later QCD that is excludable from income if deductible IRA contributions were made after that age.¹ It is not the most common issue, but it is exactly the kind of detail worth flagging before year-end.

For charitably inclined retirees, the QCD is one of the cleanest tools in the tax code. It turns a required IRA distribution into a charitable gift, keeps the qualifying amount out of income, can satisfy RMDs, and may avoid AGI-related collateral damage that a normal withdrawal and Schedule A deduction cannot fully solve.

That does not mean every charitable dollar should come from an IRA. Appreciated securities, donor-advised funds, estate objectives, state tax rules, and liquidity all still matter. But when the facts are simple -- an eligible IRA owner, recurring gifts to operating charities, and pre-tax IRA dollars that would eventually be taxed as ordinary income -- the QCD is often the first place to look.

Our team will continue coordinating these decisions with clients and their CPAs because the execution matters. The idea is simple. The paperwork has to be right.

All my best,

Brandon VanLandingham, CFA, CMT, CFP

Founder / CIO

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.

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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, Topic No. 506, "Charitable contributions." https://www.irs.gov/taxtopics/tc506 4. Social Security Administration, "Premiums: Rules for Higher-Income Beneficiaries," Medicare Premiums for 2026. https://www.ssa.gov/benefits/medicare/medicare-premiums.html 5. Internal Revenue Service, "Social Security Income" FAQ. https://www.irs.gov/faqs/social-security-income

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