Are you age 70½ or older, charitably inclined, and looking for ways to reduce your taxable income? If so, a qualified charitable distribution (QCD) could be worth considering to help you get more out of giving.

What Are QCDs?

QCDs allow eligible individuals to make tax-free donations to qualified 501(c)(3) charities from certain retirement accounts. These distributions can come out of a traditional IRA, SEP/SIMPLE IRA (if inactive) or inherited IRA (if the beneficiary is over the age requirement).

The IRS sets an annual limit on how much individuals can give through a QCD and indexes that amount for inflation. In 2026, the QCD limit is $111,000 per individual.

It is important to note that QCDs cannot be gifted to donor advised funds, private foundations or supporting organizations. Married couples filing jointly can each give up to the annual limit if they both have their own IRA. QCDs have a direct transfer requirement, meaning distributions must be made directly from an IRA to the qualified charity.

Benefits of a QCD

QCDs have several important financial planning benefits, including:

QCDs satisfy charitable giving goals in a fiscally smart manner.

Individuals who are still in the workforce and like to donate to charity typically either write a check or make an electronic donation from their checking account. If you are under age 70½, that approach makes sense and is something you have likely included in your budget.

However, if you are retired, over age 70½, and taking distributions from an IRA to replace your income, you might be using a portion of your IRA withdrawals to give to charity instead. The challenge, however, is that withdrawals from an IRA increase your taxable income. Giving to charity with a QCD instead could allow you to satisfy your charitable giving goals in a more tax-efficient way.

QCDs reduce or satisfy required minimum distributions.

Individuals age 70½ or older who have not yet reached their required minimum distribution (RMD) age (which is currently 73 for anyone born in 1951-1959 and which will be 75 for anyone born in or after 1960) can use QCDs to gift directly out of their IRA. Doing so helps reduce your IRA balance and potentially lower future RMD amounts.

Those who have reached their RMD age can use QCDs to satisfy some or all of their RMD, as long as the amount does not exceed the annual QCD limit.

Timing to Consider

QCDs must be completed by December 31 of each year to count for that tax year. Some individuals may choose to make their QCDs at that time as part of their year-end financial planning, but there can be benefits to making QCDs at the beginning of the year instead.

For example, making QCDs earlier can help you plan ahead for the remaining distributions needed to satisfy your RMDs. Plus, making QCDs earlier in the year can help you and your tax professional understand what availability you have to take on more income, before pulling from investment accounts or cash.

If you choose to make QCD gifts near year end, we recommend you reach out to your IRA provider by the end of November to learn what deadlines and requirements your provider may have for completing QCDs.

Work With Your Advisor

If you are interested in learning more about QCDs and whether they make sense for your situation, be sure to talk with your wealth advisor or tax professional.

This article was published in the Q2 2026 issue of the Bell Wealth newsletter.