As the year winds down, many Texas retirees are thinking about the causes and communities they want to support. If you are age 70½ or older and have an IRA, a Qualified Charitable Distribution, often called a QCD, may offer a way to give directly from your retirement account.
A properly completed QCD can be excluded from taxable income and may count toward all or part of your required minimum distribution (RMD), if one applies to you. But it must follow specific rules, and the transfer has to be completed within the calendar year to count for 2026. This is not tax advice. Consult a qualified tax professional before making a tax-related decision.
What is a Qualified Charitable Distribution?
A QCD is a distribution made directly from an eligible IRA to a qualifying charity. The IRA owner must be at least age 70½ on the date the distribution is made. The IRS describes a QCD as an IRA distribution “paid directly from the IRA to a qualified charity.” See the IRS overview of IRA distribution and QCD rules.
The age requirement for a QCD is distinct from the age at which many IRA owners begin taking RMDs. Under current rules, RMDs generally begin at age 73, but an eligible person age 70½ or older may be able to make QCDs before RMDs are required.
For 2026, the annual QCD exclusion limit is $111,000 per individual. The limit applies to the total qualifying distributions made by that person during the year. If both spouses meet the requirements and each has an IRA, each may have a separate limit. The IRS announced the 2026 limit in Notice 2025-67.
How a QCD can work with an RMD
A QCD can count toward the IRA owner’s RMD for the same year. For example, imagine an IRA owner has a 2026 RMD of $28,000 and directs $10,000 from the IRA custodian to an eligible charity as a QCD. The QCD may satisfy $10,000 of that RMD; the remaining RMD would still need to be met.
If the owner directs the full RMD to charity through eligible QCDs, the QCDs may satisfy the entire RMD. The amount that qualifies as a QCD generally is not included in gross income. That can help keep taxable income lower than it would be if the same amount were paid to the IRA owner first.
A QCD is not limited to people who already have an RMD. An eligible IRA owner may make a QCD even before reaching the age when RMDs begin, provided the other requirements are met.
This is not tax advice: a QCD’s effect depends on the individual’s accounts, circumstances, and applicable rules. Consult a qualified tax professional to evaluate how a potential distribution would be treated in your case.
QCD versus withdrawing and then donating
The route the money takes matters. With a QCD, the IRA custodian transfers the funds directly to an eligible charity. If you instead withdraw the money to your own bank account and then write a personal check to a charity, the IRA withdrawal is generally included in income under the ordinary rules. You may be able to claim a charitable deduction if you meet the requirements, but that is a separate tax treatment, not a QCD.
A qualifying QCD is generally excluded from income rather than claimed as an itemized charitable deduction. You cannot claim a charitable deduction for the same QCD amount excluded from income. Whether a personal donation may be deductible depends on individual rules and circumstances.
This is not tax advice. Consult a qualified tax professional about the potential consequences of either approach. The IRS provides additional background in Publication 590-B.
A practical year-end checklist
If charitable giving from an IRA is already part of your plans, these steps can help you organize the process:
- Confirm your age on the distribution date. You must be at least 70½ when the QCD is made.
- Check the account type. QCDs are generally available from IRAs, including traditional and inherited IRAs. Special rules apply to SEP and SIMPLE IRAs; ongoing employer-contribution accounts generally do not qualify. A QCD is generally not made directly from an employer plan such as a 401(k).
- Verify the charity’s eligibility. Many public charities qualify, but donor-advised funds, private foundations, and supporting organizations generally do not.
- Ask the IRA custodian about its process and year-end cutoff. Request the transfer early. A request submitted near December 31 may not be completed in time.
- Direct payment to the charity. Do not receive the funds personally before donating them if you intend the transfer to be treated as a QCD.
- Keep the records. Retain the custodian’s distribution confirmation and the charity’s written acknowledgment.
- Review reporting with a tax professional. IRA custodians report distributions, and a tax return may need to identify the qualifying QCD amount.
To count for 2026, the QCD must be completed by December 31, 2026. Simply submitting a request by that date may not be enough if the custodian processes it after year-end. Procedures vary, so confirm the details directly with your custodian and allow time for processing. This is not tax advice; consult a qualified tax professional about timing, reporting, and whether your intended recipient qualifies.
Choosing a meaningful local recipient
A QCD can be a practical way to support a charity whose work matters to you, whether that is a community organization, cultural institution, place of worship, or other eligible nonprofit. In the Hill Country, giving may also reflect a desire to help preserve the small-town character and neighbor-to-neighbor spirit that make the region feel like home.
If you are exploring ways to stay connected to local causes, Texas Retirement Journal has also covered how retirees find purpose through volunteering. A financial gift and time spent serving are different forms of generosity; both can be considered as part of the life you want to build in retirement.
Keep family giving separate from charitable giving
Some grandparents also want to help younger family members build a financial foundation. That is a separate goal from charitable giving through a QCD. QCD dollars go to eligible charities, not to a grandchild or a family savings account.
The IRS says children born from January 1, 2025, through December 31, 2028, may qualify for a one-time $1,000 federal pilot-program contribution to a Trump Account, subject to eligibility requirements including U.S. citizenship and a valid Social Security number. Contributions to Trump Accounts could not be made before July 4, 2026. See the IRS Trump Accounts page for current program information.
A charitable IRA transfer and family support each have their own purpose, process, and rules. If you are considering both, keep the transactions distinct and consult a qualified tax professional about tax matters. This is not tax advice.
A QCD can connect year-end giving with IRA distributions when the eligibility, transfer, charity, and timing requirements are met. Start early, confirm the custodian’s procedures, and make sure the gift fits your charitable intentions and overall retirement needs.
Schedule a private meeting with a fiduciary financial advisor today by calling (512) 593-8380 or by visiting: https://calendly.com/portafoliocapital/15min
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
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