IRA Charitable Giving Tips

As year-end approaches, many of our clients start thinking about charitable giving. If you’re over age 70½, one of the most tax-efficient ways to give is directly from your IRA. This strategy—called a Qualified Charitable Distribution (QCD)—can help you support the causes you care about and reduce your tax bill.

What is a QCD?

A QCD allows you to transfer up to $108,000 per year (2025 limit; indexed for inflation in future years) directly from your IRA to a qualified charity. The distribution counts toward your Required Minimum Distribution (RMD) but is excluded from your taxable income.

Why it matters

• Tax savings: Because the gift doesn’t show up as income, you may avoid moving into a higher tax bracket, paying more in Medicare premiums, or reducing deductions and credits tied to Adjusted Gross Income (AGI).

• Simplicity: Even if you don’t itemize deductions, a QCD provides a clear tax benefit.

• Impact: You’re able to give more effectively by using retirement dollars in a way that aligns with both your financial plan and your values.

Key Tips for Making QCDs Work

1. Direct transfer is essential. The funds must go straight from your IRA custodian to the charity. If the money comes to you first, it becomes taxable.

2. Eligible charities only. QCDs can’t go to donor-advised funds, private foundations, or supporting organizations—only to public charities that qualify.

3. Documentation matters. Keep acknowledgment letters from the charity for your tax records.

4. Coordinate with your advisor. QCDs should be considered alongside your broader retirement and tax strategy, especially if you have multiple income sources.

5. Think timing. Complete transfers before December 31 so they count for the current year’s RMD.

   
   

Beyond QCDs: Other IRA Charitable Options

• Naming a charity as a beneficiary: IRA assets left to heirs are fully taxable, but charities pay no tax on inherited IRAs.

• Charitable remainder trusts funded with IRA assets: Can provide lifetime income to you or your heirs while leaving the remainder to charity.

  
  

Final Thought

Charitable giving can be both generous and strategic. For clients who qualify, IRA-based giving—particularly QCDs—offers a unique opportunity to reduce taxes while making a difference.

📌 Don’t wait until year-end. IRA charitable strategies work best when coordinated early and done correctly. If you’re considering a gift from your IRA this year, let’s make sure it reduces your taxes and maximizes your impact.

Let’s Talk About Your Strategy

Schedule your call today and make the most of your giving plan.