If you’re charitably inclined and want to share your wealth later in life,
What is a QCD?
A QCD is a tax-free donation from your individual retirement account (IRA) to a qualified organization. This includes nonprofit groups that are
What are the eligibility requirements to make a QCD?
“You must be 70½ or older and own an IRA to make a QCD,” says Brent Robinson, an Advice Services consultant for Thrivent. Traditional and inherited IRAs—as well as inactive Savings Incentive Match Plan for Employees (SIMPLE) and Simplified Employee Pension (SEP) plan IRAs, which no longer receive contributions—are eligible, so long as the money is directly transferred from the IRA custodian to the charity.
In 2024, the annual QCD limit for an individual is $105,000, a number that may increase from year to year based on inflation. You can make one large donation or several smaller donations throughout the year, but the total amount of QCDs taken from all your IRAs cannot exceed that limit.
QCDs by the numbers
What are the benefits of QCDs?
Making QCDs can be a smart tax-efficiency strategy. “QCDs can reduce your adjusted gross income and lower your tax bracket on the amount of taxes you pay,” Robinson says. “So, for example, if you make a $10,000 QCD from your IRA, you don’t have to report that money as income.” This, in turn, can help lower Medicare premiums and Social Security taxes.
If you make a QCD before age 73, or 75 depending on when you were born, it reduces your IRA, which in turn can reduce your required minimum distributions (RMDs). Once your RMD goes into effect, if you make a QCD in excess of your RMD, this also reduces your IRA balance, potentially decreasing future RMDs.
You must complete QCDs by Dec. 31 for them to count toward your annual RMD. To get started, talk to your
