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Retirement Planning

The best way to make charitable gifts after age 70½

8 Minute Read

When you’re age 70½ or older, the best way to make charitable contributions usually is through qualified charitable distributions (QCD) from a traditional IRA. A QCD can satisfy your required minimum distribution (RMD) for the year and reduce your income taxes.

The QCD was a temporary innovation in 2006 but was made a regular part of the tax law in 2015. You should include the QCD in your tax planning if you’re over 70½ and charitably inclined at all.

When a charitable contribution is made from a traditional IRA and doesn’t qualify as a QCD, the contribution is treated as a distribution and included in the owner’s gross income. The result is the same whether the contribution is made by a direct transfer from the IRA custodian to the charity or a distribution is made to the IRA owner who then makes a charitable contribution.

The owner can take a charitable contribution deduction but only as part of itemized expenses on Schedule A. Most people don’t itemize expenses anymore because the standard deduction is so high.

In 2020 up to $300 of charitable contributions could be deducted without itemizing expenses. There’s also an exception in 2021. A married couple can deduct up to $600 of charitable contributions without itemizing and an individual up to $300.

But the results are very different when the contribution qualifies as a QCD.

When a QCD is made, the charitable contribution made from the IRA isn’t included in the gross income of the IRA owner. The owner also doesn’t take a deduction for the contribution. The QCD counts toward any RMD for the year. (The beginning age for RMDs now is 72, but QCDs still can begin at 70½.)

Suppose your RMD for the year is $17,000. Make at least $17,000 of QCDs and you’ve satisfied both your RMD and $17,000 of your charitable giving for the year. The money is out of your traditional IRA, but there’s no gross income on your tax return.

A QCD can be a good strategy during a year when all or part of a traditional IRA is being converted to a Roth IRA. In the year of the conversion, you still are required to take your RMD for the year, regardless of when during the year the conversion is done. You won’t be able to convert the RMD amount. Without the QCD, you’d have to include the RMD in gross income along with the converted amount. The alternative is to make a QCD with the RMD amount. That keeps the RMD amount out of your gross income.

For a charitable distribution from an IRA to qualify as a QCD, the charitable contribution must be made directly from the IRA custodian or trustee to the charity. If you receive a distribution from the IRA and later make a contribution to charity, that doesn’t count as a QCD. That distribution will be included in gross income.

As an alternative, the IRA custodian can give you a check that is payable to the charity, and you can deliver that check to the charity. Your IRA custodian also might provide you with a checkbook. You can write a check against the IRA directly to a charity. Either of these actions will count as a QCD.

You must be at least age 70½ by the date of the charitable contribution. If you turn 70½ during the calendar year, transfers made from the IRA to a charity before you turn 70½ don’t count as QCDs.

QCDs are limited to no more than $100,000 annually per taxpayer. No matter the amount of your RMD for the year, you can give up to $100,000 to charities from your IRA as QCDs.

If your charitable giving from the IRA for the year exceeds $100,000, the contributions above $100,000 are treated as non-QCDs and taxed as described earlier in this article. When your QCDs are less than $100,000, you don’t carryover the unused amount to increase the limit in future years. The $100,000 annual limit is a use-it-or-lose-it amount.

The $100,000 annual limit is per taxpayer. There is no sharing of the limit between married taxpayers.

A QCD can be made only from an IRA. Employer retirement plans aren’t eligible for QCDs. Also, QCDs can be made from simplified employee pensions (SEPs) and Simple IRAs only when the plan hasn’t received an employer contribution for the plan year that ends with or during the calendar year in which the IRA owner plans to make the charitable contribution from the IRA.

After-tax money can’t be used to make a QCD. Unlike in other situations, pre-tax money in a traditional IRA can be segregated and designated for a QCD. In other situations, taking money out of the traditional IRA would be automatically pro-rated between pre-tax and after-tax money.

When your IRA has a mix of pre-tax and after-tax money and you use the pre-tax money to make a QCD, that reduces the pre-tax money in the IRA. That reduces income taxes in future years when the IRA money is distributed or converted to a Roth IRA.

The IRA owner can’t receive any benefit from the charitable contribution. Any small gift or reward from the charity could make the entire contribution ineligible for QCD treatment. A QCD, however, can be used to satisfy a pledge the IRA owner made to the charity.

All the regular rules for substantiating charitable contributions must be followed. That means the IRA owner should have documentation in writing from the charity acknowledging the amount and date of the contribution.

QCDs can be made only to public charities that are eligible for charitable contribution deductions under the regular IRS rules. Gifts to private foundations and donor-advised funds or that are used to fund charitable gift annuities aren’t eligible for QCDs.

The SECURE Act permits contributions to traditional IRAs after age 70½. It also prohibits an individual from combining a QCD and deductible IRA contributions made after age 70½.


This article was written by Bob Carlson from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to

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