Qualified charitable distributions (QCDs) and required minimum distributions (RMDs) are closely related, but they serve different purposes. An RMD is a mandatory retirement-account withdrawal, while a QCD is an optional way to direct eligible IRA funds to charity without including the qualifying amount in taxable income. Understanding how the two interact can help advisors make charitable planning part of their clients’ retirement-income planning.
RMDs Are the Mandatory Floor
A required minimum distribution is the minimum amount the IRS requires an account owner to withdraw each year from a traditional IRA, and most employer retirement plans, once they reach a set age. Under SECURE 2.0, that age depends on birth year: 73 for clients born between 1951 and 1959, and 75 for clients born in 1960 or later. RMDs are calculated from the account’s prior year-end balance and an IRS life expectancy factor, and unless offset, they are taxed as ordinary income.
QCDs Are Optional, and They Work Differently
A QCD is available starting at age 70½, two and a half to four and a half years before RMDs begin, depending on the client’s birth year. A QCD must move directly from the IRA custodian to a qualifying public charity; the client can never take possession of the funds. For 2026, a client can direct up to $111,000 to charity this way. The limit is indexed for inflation and changes each year, so confirm the current figure before each planning season. Spouses with their own separate IRAs each have their own $111,000 limit.
The more important distinction is mechanical. A qualifying QCD is excluded from taxable income rather than offset by an itemized charitable deduction. Although the distribution must still be reported on the tax return, the qualifying amount is not included in adjusted gross income (AGI).
Where the Two Overlap
Once a client reaches RMD age, a QCD can satisfy that year’s RMD, dollar for dollar, up to the RMD amount. If the RMD is $30,000 and the client directs $30,000 through a QCD, the RMD requirement is met and none of it is taxable. A QCD larger than the RMD is still excluded from income up to the annual limit, but the excess does not carry forward to reduce a future year’s requirement.
Sequencing matters here. Distributions taken earlier in the year count toward the RMD first. To use a QCD to satisfy some or all of the RMD, the QCD must leave the IRA before that portion of the RMD has already been withdrawn. A client who takes the full RMD as a standard distribution and later makes a QCD still has a valid QCD, and the QCD amount is still excluded from income. But the RMD was already satisfied by the earlier withdrawal, so that withdrawal remains taxable and cannot be recharacterized as a QCD after the fact.
Timing also sets the tax year. A QCD counts in the year the funds leave the IRA, so a request made in December that the custodian processes in January will not satisfy the current year’s RMD. Why Advisors Should Discuss Qualified Charitable Distributions Before Year-End covers custodian timing and year-end deadlines.
What a QCD Cannot Do
A QCD must go directly to an eligible charity. By law, it cannot be contributed to a donor-advised fund at any sponsor, a supporting organization, or most private foundations. This restriction applies across the industry, not just at one sponsor. A separate, one-time election allows eligible donors to transfer up to $55,000 in 2026 to certain charitable remainder trusts or charitable gift annuities, subject to additional requirements. Because the election can be used only once and must be completed within a single tax year, advance planning is important.
Why the AGI Exclusion Matters More in 2026
Beginning in 2026, three changes affect how charitable gifts are deducted:
- A 0.5% floor for itemizers: itemized charitable deductions are reduced by an amount equal to 0.5% of AGI.
- A 35% cap for top-bracket taxpayers: for clients in the 37% bracket, the value of itemized deductions is capped at 35%.
- A new deduction for non-itemizers: up to $1,000 for single filers and $2,000 for joint filers, for cash gifts to qualifying operating charities. Gifts to donor-advised funds do not qualify.
None of these changes touch a QCD, because a QCD was never a deduction to begin with. For eligible clients, that makes QCDs particularly worth considering as part of their broader charitable and retirement-income planning.
If a client’s situation raises questions about how QCDs fit into their RMD schedule and charitable goals, PCF can walk through the available giving options with you.
Refer a client, or ask a question about a specific case, by contacting Meg Lokey, Vice President of Philanthropy at Pinellas Community Foundation, at 727-306-3142 or ml****@********cf.org. PCF reaches out to your client within one business day, only in the way you’ve specified, and you stay in the loop at every step.
