As you begin working with your clients on their annual charitable giving strategies, you may occasionally find yourself wondering: “What are the details of a Qualified Charitable Distribution?”
It’s an excellent question—and you’re certainly not alone in asking it. Despite frequent coverage in financial publications, QCDs contain enough complexity that recalling all the nuances can be challenging when evaluating potential opportunities for your clients.
The Foundation for Delaware County is ready to support you! Please contact us with any charitable giving questions, including these frequently asked QCD questions:
Is an IRA the only eligible source for Qualified Charitable Distributions?
Short answer: Almost.
Long answer: An individual can make a Qualified Charitable Distribution directly to an eligible charity from a traditional IRA or an inherited IRA. If the individual’s employer is no longer contributing to a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE) IRA, the individual may use those accounts as well. In theory, a Roth IRA could be used to make a QCD, but it is rarely advantageous to do so because Roth IRA distributions are already tax-free.
What is the difference between a QCD and an RMD?
Short answer: Quite a bit! But a QCD can count toward an RMD.
Long answer: Everyone must start taking Required Minimum Distributions (RMDs) from their qualified retirement plans, including IRAs, when they reach the age of 73. RMDs are taxable income. The Qualified Charitable Distribution, by contrast, is a distribution directly from certain types of retirement plans (such as IRAs) to certain types of charities. A QCD can count toward the taxpayer’s RMD for that year. And because the QCD goes directly to charity, the taxpayer is not taxed on that distribution.
Can a taxpayer make a Qualified Charitable Distribution even if they are not yet required to take Required Minimum Distributions?
Short answer: Yes – within a very narrow age window.
Long answer: RMDs and QCDs are both distributions that impact retirement-age taxpayers, and it would seem logical that the age thresholds would be the same. Under the SECURE Act, though, the required date for starting RMDs shifted from 70 ½ to 72 and is now up to 73 (which is better for taxpayers who want to delay taxable income). A corresponding shift was not made to the eligible age for executing QCDs; that age is still 70 ½ (which benefits taxpayers who wish to access IRA funds to make charitable gifts even before they are required to take RMDs).
Can my client direct a QCD to a fund at The Foundation for Delaware County?
Short answer: Yes, if it’s a qualifying fund.
Long answer: While donor-advised funds are not eligible recipients of QCDs, other types of funds at the Foundation can receive QCDs. These funds include Foundation-directed funds, field of interest funds, designated funds, scholarships, and endowment funds established for the benefit of nonprofit organizations.
How much can a client give through a QCD?
Short answer: $108,000 per year in 2025.
Long answer: A Qualified Charitable Distribution permits a client (and a spouse from a spouse’s own IRA or IRAs) to transfer up to $108,000 in 2025 from an IRA (or multiple IRAs) to a qualified charity. So, a married couple may be eligible to direct up to a total of $216,000 in 2025 to charity from IRAs and avoid significant income tax liability.
The Foundation is here to help you and your clients leverage the potential of QCDs. Please contact us! We’d be delighted to discuss QCD strategies for your clients’ immediate giving needs and long-term philanthropic goals.
For more information about how we can help you serve your philanthropic clients, contact Monika Collins, mcollins@delcofoundation.org. We’re always available to answer your questions about philanthropy or to schedule a personal consultation with you and your clients – all at no cost.
