Key Points
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A QCD is a charitable donation you can make in lieu of a required minimum distribution (RMD).
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You must donate to a qualifying tax-exempt organization for it to count.
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The money may not pass through your hands first, or it will not count as a QCD.
You know in the back of your mind that you’ll have to pay taxes on at least some of your retirement income, but it’s one thing to know this and another to actually watch Uncle Sam take thousands of dollars of your hard-earned savings. Once you turn 73, it gets even more complicated because you’re no longer wholly in control of your retirement withdrawals.
You have to take required minimum distributions (RMDs) from all tax-deferred 401(k)s and IRAs and pay taxes on that money. That could push you into a higher tax bracket than you’d bargained for. However, a qualified charitable distribution (QCD) can help you avoid the bloated tax bill while doing some good for others in the process. Here’s exactly how to do it.
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Figure out what RMDs you need to take
A QCD is an acceptable alternative to an RMD in the IRS’s eyes. Instead of withdrawing the money for yourself, you donate it to a charity. You don’t get to keep the funds, but you also don’t owe taxes on them.
The first step is to calculate your RMDs. You do this by taking your account balances as of Dec. 31, 2025, and dividing them by the applicable denominator for your age from the IRS’s Uniform Lifetime Table. For example, if you have a traditional IRA with a $500,000 balance and you’re 75, you’d divide the $500,000 by the 24.6 applicable denominator to get an RMD of $20,325.
If you’ve already taken money out for living expenses this year, subtract this from your RMD to figure out how much more you still need to withdraw for your QCD. Keep in mind that the 2026 limit on QCDs is $111,000. This should be plenty for most people, but it could be a problem for wealthy seniors.
Decide which organization to donate to and how much you want to give them
You must donate your RMD to a qualifying tax-exempt organization if you want it to count as a QCD. If you’re unsure whether the organization you’re considering qualifies, you can always ask the organization directly or look it up in the IRS database linked above.
Decide how much of your RMD you want to allocate to the organization. You can give to more than one cause, if you’d like.
Ask your retirement plan administrator to transfer the funds
Your donation won’t qualify as a QCD if you withdraw the money from your account and give it to the charity. The money cannot pass through your hands first. You must notify your plan administrator about where you want to donate the funds. It will handle the transfer for you.
You technically have until Dec. 31, 2026, to complete your RMD for the year, or April 1, 2027, if you’re turning 73 this year. But it doesn’t hurt to get it out of the way earlier. It can take time to decide who you’d like to donate to and for the transfer itself to process. Consider starting now so you can put RMDs behind you for the remainder of the year.
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