Planning for retirement is about more than making your savings last. It’s also an opportunity to align your money with your values. For many retirees, that means thinking beyond their own financial needs and identifying strategies to contribute to the causes they care about.
You may be wondering how to give in a way that’s both meaningful and tax-savvy. For many Idaho retirees, qualified charitable distributions (QCDs) offer a way to support charities you believe in, directly from your IRA, without raising your taxable income.
How Do Qualified Charitable Distributions (QCDs) from IRAs Work?
Qualified charitable distributions, or QCDs, allow you to transfer funds directly from your IRA to a qualified charity. To be eligible, you must be at least age 70½ when the distribution is made. For 2025, each individual can contribute up to $108,000 per year ($216,000 for married couples filing jointly) through a QCD, and this amount applies separately from the standard charitable deduction limits.1
To qualify as a qualified charitable distribution, the donation must be sent straight from your IRA custodian to the charity. If you take the distribution yourself and then contribute it, the amount becomes taxable and no longer meets the requirements for a QCD. This direct transfer requirement is a key detail that distinguishes QCDs from other forms of giving.
Qualified charitable distributions are limited to traditional IRAs. Funds held in retirement plans like 401(k)s or 403(b)s aren’t eligible unless they’ve first been transferred into a traditional IRA through a rollover. Roth IRAs technically allow QCDs, but they usually don’t offer any tax advantage unless you’re required to take distributions (ex: from an inherited Roth IRA).
QCDs can also be used to meet your required minimum distribution (RMD) once you reach age 73. By donating directly from your IRA, you’re able to fulfill the RMD without raising your adjusted gross income (AGI). That can be particularly helpful if you’re trying to manage the taxability of your Social Security benefits or avoid higher Medicare premiums.
Finally, and perhaps the most appealing feature, the amount donated through a QCD is excluded from your AGI entirely. Unlike traditional charitable deductions, which reduce taxable income only if you itemize, QCDs offer a tax benefit even if you take the standard deduction.
Why Might Idaho Retirees Consider QCDs?
If you’re retired in Idaho, you may already benefit from the state’s relatively low income tax rates—but that doesn’t mean strategic giving isn’t worth considering. Idaho does not tax Social Security benefits, but IRA distributions are still included in your state taxable income. Using a Qualified Charitable Distribution (QCD) can help you reduce that income without losing out on federal or state tax benefits.
Because QCDs reduce your adjusted gross income (AGI), they may help you avoid hidden tax consequences tied to income thresholds. For example, a lower AGI might help you qualify for or preserve certain deductions or credits that phase out at higher income levels. This can create ripple effects that impact your full tax picture, not just your charitable giving.
Lowering your AGI through a QCD can also affect Medicare costs. The amount you pay for Medicare Part B and Part D is tied to your income from two years ago. If a QCD keeps your income below a key threshold, you may be able to avoid income-related monthly adjustments (IRMAA), which can raise your premiums significantly.
Even though Idaho has no separate estate or inheritance tax, QCDs still allow you to give directly, reduce your federal and state taxable income, and support causes you care about—all while simplifying your retirement income plan.
What Types of Charities Qualify for QCDs?
To benefit from the tax advantages of a Qualified Charitable Distribution (QCD), the charity receiving your donation must meet specific IRS requirements. Not every nonprofit organization qualifies, so it’s important to understand what does (and doesn’t) count:
Public Charities Only: Your donation must go to an IRS-recognized 501(c)(3) public charity. This includes many national and local nonprofits such as religious organizations, animal shelters, educational institutions, and health-related charities. Idaho Gives is a great resource for identifying local nonprofits that align with your values and goals.
Ineligible Organizations: Some nonprofits don’t qualify for QCDs, even if they have tax-exempt status. These include donor-advised funds, private foundations, and supporting organizations. Giving to these types of entities can cause the distribution to be counted as taxable income.
Please Note: Always verify that your chosen organization qualifies before initiating the transfer. You can confirm eligibility using the IRS Tax Exempt Organization Search tool or by consulting a financial professional.
How to Set Up a QCD from Your IRA
While not difficult to arrange, a QCD still involves a few important details that need to be handled carefully. If done correctly, it can be a smooth and satisfying way to give back, while also keeping your tax bill in check. Here’s how to get started:
Step 1) Confirm Charity Eligibility: Make sure the organization you’ve chosen is a qualified 501(c)(3) charity. Avoid donor-advised funds (DAFs) and private foundations, which are not eligible for QCDs.
Step 2) Consult Your IRA Custodian or Financial Advisor: Before initiating anything, contact your IRA custodian to confirm that your account is eligible for QCDs. It’s often wise to consult with a financial professional who can help you understand how the distribution fits into your overall financial plan.
Step 3) Initiate the Transfer: Ask your IRA custodian to donate directly to the charity. This means the check must be payable to the organization—not to you. Direct transfers are required for the distribution to be formally considered a QCD.
Step 4) Request Documentation: The organization receiving the donation should give you a written confirmation of the gift. This record should include the amount received, the date, and verification that you received no goods or services in return.
Step 5) Verify Year-End Timing: To count toward your RMD for the year, the QCD must be processed by December 31st. That means any donations made need to clear before year-end.
Common Mistakes to Avoid
Even well-intentioned gifts can go sideways if you miss a key step in the QCD process. A few missteps can turn a tax-advantaged strategy into an unexpected headache. Before making a move, watch out for the following mistakes:
Donating Funds Personally: If you withdraw money from your IRA and then write a personal check to a charity, it no longer counts as a QCD. The money needs to be sent straight from your IRA custodian to the charitable organization. Otherwise, the IRS considers it a taxable distribution.
Using the Wrong Account Type: Traditional IRAs are the most common source for QCDs, as they help lower taxable income while also satisfying required minimum distribution (RMD) rules. While possible from Roth IRAs, QCDs offer little benefit since Roth withdrawals are already tax-free and not subject to RMDs unless inherited. If your funds are sitting in a 401(k), 403(b), or another employer-sponsored plan, you’ll need to roll those into an IRA first before you can make a QCD.
Missing Year-End Deadlines: To count for the current tax year, the charity must receive the funds by December 31st. Delaying the process may cause you to miss the cutoff date, which could mean losing the tax benefits.
Assuming All Charities Qualify: Just because an organization is a nonprofit doesn’t mean it qualifies for QCDs. Donor-advised funds, foreign charities, and some private foundations are excluded. Always confirm the charity’s eligibility in advance.
Qualified Charitable Distributions (QCDs) FAQs
1. What is the QCD age requirement?
You must be at least 70½ years old on the date the distribution is made from your IRA. This age requirement is fixed and applies even if your required minimum distributions (RMDs) don’t begin until age 73.
2. How much can I donate through a QCD?
For 2025, you can make up to $108,000 in qualified charitable distributions per year—or $216,000 if you’re married and file jointly. This amount is separate from the standard charitable deduction limits.
Please Note: A one-time QCD to fund a charitable gift annuity or charitable remainder trust is limited to $54,000 in 2025.2
3. Can QCDs fulfill my RMD?
Yes. If you’re required to take RMDs, a QCD can be applied toward fulfilling that obligation. The donated portion satisfies your RMD without increasing your adjusted gross income (AGI).
4. Do I get a tax deduction for a QCD?
No. Rather than taking a deduction, the QCD amount is simply excluded from your taxable income. This approach can offer a greater advantage—particularly for those who take the standard deduction.
5. Can I use a Roth IRA for a QCD?
Technically, yes, but it’s rarely beneficial. Roth IRAs aren’t subject to RMDs during your lifetime (unless the account has been inherited), and distributions are generally tax-free, so using a QCD from a Roth IRA offers no added tax advantage.
6. What paperwork do I need to report a QCD on my taxes?
The distribution will appear on Form 1099-R from your IRA custodian. To support the QCD, you’ll also need a letter from the charity confirming the amount given and stating that no goods or services were provided in return. Be sure to keep this documentation with your tax files.
We Help Idaho Retirees Make the Most of Charitable Giving
QCDs offer a way to give intentionally while managing income in retirement. When you integrate charitable giving into your broader financial strategy, you’re doing more than supporting a cause; you’re also using the tools available to you in a thoughtful way.
For many Idaho retirees, QCDs can align with both personal values and long-term planning goals. Whether you’re hoping to keep your taxable income low, maintain access to deductions, or simply make a lasting impact on your community, this strategy is worth considering.
It is beneficial to work with someone who can walk you through the steps, confirm that your chosen charity qualifies, and time your distribution properly.
Professional guidance also reduces the risk of missteps that could affect your taxes or delay your gift. Schedule a complimentary consultation with our team to learn how QCDs can work for you and your retirement goals.
Resources:
- https://www.fidelity.com/retirement-ira/required-minimum-distributions-qcds#:~:text=Frequently%20asked%20questions,gift%20them%20to%20a%20charity
- https://www.schwab.com/learn/story/reducing-rmds-with-qcds
The information contained herein is for educational purposes only and does not constitute investment, legal, or tax advice. Individual circumstances vary, and you should consult your own financial, legal, and tax advisors before making any decisions. All strategies discussed are subject to change based on current laws and regulations.
Recognized multiple years as a Best in State Wealth Advisor by Forbes, Brian is the Managing Principal at BR Wealth Management - a Boise, Idaho firm that helps families across the country to craft tailored, tax-efficient plans for retirement income and multi-generational wealth transfer.
The Forbes Best in State Wealth Advisor ranking algorithm is based on industry experience, interviews, compliance records, assets under management, revenue and other criteria by SHOOK Research, LLC, which does not receive compensation from the advisors or their firms in exchange for placement on a ranking. Investment performance is not a criterion. Please click here to see the full ranking.