Can you give a QCD to your church to satisfy your RMD?

With so many financial demands on your plate, it can be hard to find the extra funds to give to the causes you care about most. And for many people, one core cause is their church. From supporting day-to-day operations to chipping in on ministries, renovations or outreach programs—it can be rewarding to see the good your dollars can bring. If you own an individual retirement account (IRA), there’s a tax-efficient way you can give back: Donating your required minimum distribution (RMD) through a qualified charitable distribution (QCD).

A required minimum distribution, or RMD, is the minimum amount of money you must withdraw from a tax-deferred retirement plan (in this case, an IRA) after you reach a certain age. That used to be age 70½, but in 2022, the SECURE Act 2.0 issued these changes:

• If you turned 72 in 2023, your RMD is due in 2024. 
• If you turn 73 between 2024 and 2032, your RMD age will be 73.  
• If you turn 74 after 2032, your RMD age will be 75. 

The reason for the change? People are living longer and therefore drawing on their retirement money for longer stretches of time. With the passage of this act, you can delay taking RMDs until later, which can give your money more time to potentially grow.

A qualified charitable distribution (QCD) is a direct transfer of funds, up to $105,000 (indexed for inflation) in 2024 if you’re 70½ or older, from your IRA to a qualified charity, which can include your church.

Because your IRA custodian sends these funds directly to your church or charity of choice (cannot be a private foundation or donor-advised fund), your contribution is not taxed.

Giving your RMD through a QCD can provide you with a means to give to your church that you may not have otherwise. Doing so also can:

• Satisfy your RMD. A QCD counts toward your annual RMD if it comes directly out of your IRA. You can give up to the full amount of your RMD (as long as it’s under $105,000), or donate part and withdraw the remainder.  
• Provide tax relief. Because you never directly touch those funds in a QCD, you can reduce or avoid the taxes you’d incur by taking your RMD otherwise. Additionally, QCDs lower your adjusted gross income (AGI) and therefore potentially reduce taxes on Social Security and avoid increased Medicare premiums.  
• Support your church’s mission and ministries. Like other charitable contributions, a QCD is a way for you to practice generosity while also furthering your church’s operations. Those can include everything from funding volunteer programs and outreach efforts, to purchasing equipment and maintaining the church building.   

The process for completing a QCD to support your church is relatively straightforward. Here’s what you need to do.

1. Contact your church office to give them a heads up and confirm an address to have the check sent to. Provide some context and information if they are not familiar with this giving strategy. (You might even consider sharing this article with them.) 
   
2. Request a distribution form from the institution that administers your IRA. In the QCD section, fill out your church’s info. Keep in mind, this transaction must be completed by December 31. 
   
3. The IRA custodian will mail the check directly to your church. Upon receipt, your church may send you an acknowledgment letter to confirm the date and amount that was received through your QCD. 
   
4. At tax time, report the charitable distribution on the line for IRA distributions. If the full amount was given as a QCD, write “0” on the taxable amount line. Enter “QCD” on the line next to it.  

And there you have it. You’ve blessed your church with a generous gift—one you can make part of your yearly giving, if you so choose.

Charitable giving is deeply personal. And it’s an important facet of your overall financial plan. Seek guidance from church leadership and connect with a local Thrivent financial advisor to help you build a giving strategy that aligns with your faith and values.