Looking Forward to Making Qualified Charitable Distributions (QCDs)

This article is part of the Biblically Informed Framework for Retirement Stewardship (BIFRS) series. It was originally published in 2022  and updated in 2026.

When I originally wrote this article in December 2022, I was 70 years old and eagerly anticipating my eligibility for Qualified Charitable Distributions at age 70½. I was fascinated by the potential tax benefits but could only speculate about how QCDs would work in practice.

Now, at age 74, I’ve been making QCDs for over three years. I can tell you definitively: QCDs are even better than I imagined. They’ve become the cornerstone of my giving strategy, saving me thousands in taxes while enabling greater generosity.

In this updated article, I’ll share both the foundational explanation of how QCDs work — updated with current 2026 limits and tax law — and my actual experience implementing them. If you’re approaching 70½ or already eligible for QCDs, this article will show you why they should probably be your primary giving vehicle.

My original excitement was validated

Most Christians I know are generous, charitably inclined people. We know that the Bible is full of texts that stress the importance of generously giving our time, talents, and treasure for as long as we live. Because our hearts have been changed and we want to follow Jesus, we offer out of love and gratitude as an act of worship (Prov. 3:9, Luke 6:38, 2 Cor. 9:7).

One way we maximize our financial resources for the good purposes God has ordained for us is by lawfully minimizing what we pay in taxes. My attitude is to cheerfully (okay, not too begrudgingly) render Caesar his due, but not a penny more (Matt. 22:21).

Retirement savings accounts offer a tax-advantaged way to save and grow your money over the years. You can reduce your current tax liability and defer taxes on investment growth until later in life — or avoid them entirely in Roth accounts.

Itemizing deductions has historically been the best way to minimize taxes. And while itemizing has become far less common under current law, we are still blessed to live in a country that generally incentivizes saving and generosity through its tax policies.

The tax landscape for charitable giving

The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, reshaped the tax environment for charitable giving in significant ways, most of which make QCDs even more valuable than before. Here is the lay of the land as of 2026:

The standard deduction is larger

For 2026, the base standard deduction is $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of household. On top of that, married couples where both spouses are age 65 or older receive an additional $1,650 per spouse under the existing age add-on, plus the new OBBBA “senior bonus” deduction of $6,000 per qualifying person ($12,000 for a qualifying couple). That senior bonus stacks on top regardless of whether you itemize.

Add it all together, and a married couple both age 65 or older with income below the phase-out threshold can shelter up to $47,500 of income from federal tax in 2026. The OBBBA senior bonus phases out beginning at $150,000 of modified AGI for joint filers and disappears entirely at $250,000 (something retirees with significant RMDs need to watch carefully).

The practical effect is that fewer taxpayers than ever will find it worth itemizing. According to recent IRS data, fewer than 10% of taxpayers now itemize. That means most people who give charitably receive no direct tax benefit unless they use QCDs.

New restrictions on itemized charitable deductions

For the minority of retirees who still itemize, the OBBBA introduced two meaningful new restrictions on charitable deductions, effective with the 2026 tax year. First, a 0.5% AGI floor now applies: itemizers can deduct only the portion of charitable contributions that exceeds 0.5% of their AGI. For example, on a $100,000 AGI, the first $500 of charitable giving is nondeductible. For most moderate-income retirees, this matters little, but it’s worth knowing.

Second, for taxpayers in the top 37% bracket, the tax benefit of all itemized deductions—including charitable contributions—is now capped at 35 cents per dollar. This is a modest reduction but another nudge away from relying on itemized deductions as a giving strategy.

Neither restriction applies to QCDs, which are excluded from income entirely rather than claimed as deductions. QCDs bypass both the AGI floor and the 35% cap by reducing taxable income directly, before it ever hits the return.

New charitable deduction for non-itemizers

Beginning in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash donations to qualified charities, even if they take the standard deduction. This welcome restoration returns a smaller benefit that expired after 2021. However, it doesn’t apply to QCDs, and it doesn’t need to. QCDs are almost always more advantageous for IRA owners over 70½, since they reduce AGI rather than simply providing a below-the-line deduction.

How QCDs work

A Qualified Charitable Distribution is simply a withdrawal from a Traditional IRA sent directly to a qualified 501(c)(3) charity—one that is completely tax-free under the current tax code.

Key benefits

• The distribution is not taxed and does not count as income
• Satisfies Required Minimum Distribution (RMD) requirements
• Reduces your Adjusted Gross Income (AGI) — not just taxable income
• Works even if you take the standard deduction
• Avoids triggering additional Social Security taxation
• Helps avoid Medicare IRMAA surcharges
• Bypasses the new OBBBA 0.5% AGI floor and 35% cap that applies to itemizers

Key requirements

• Age: Must be 70½ or older
• Account type: Traditional IRA (not Roth, SEP, or SIMPLE unless rolled to a Traditional IRA first; not directly from a 401(k) or 403(b))
• Annual limit: $111,000 per person in 2026, indexed for inflation
• Recipient: Must be a 501(c)(3) public charity — not private foundations, donor-advised funds, or supporting organizations
• Direct transfer: Must go directly from the IRA to the charity; cannot pass through your hands first

Here is a simple illustration: if your RMD is $30,000 and you direct $15,000 via QCD to charities and take the remaining $15,000 as ordinary income for living expenses, you have satisfied the full RMD requirement. But only $15,000 appears as taxable income on your return. The QCD portion never shows up as income.

Real-world examples

The best way to show how powerful QCDs can be is with updated examples using 2026 figures.

Example #1: Alex and Alice, age 73

Alex and Alice receive $10,000 per year from a pension and $38,000 from Social Security. Their IRA balance of approximately $600,000 generates an RMD of roughly $22,000 at the age-73 rate. They give $10,000 annually to their church and ministries, and have other potential itemized deductions of about $11,500.

Without QCDs:

Their charitable giving of $10,000, combined with other deductions, totals only $21,500 in potential itemized deductions, which is far below the $47,500 standard deduction, so they take the standard deduction and receive no direct tax benefit from their $10,000 of giving.

With QCDs:

Tax savings: approximately $800 per year. More importantly, Alex and Alice are giving $10,000, which only “costing” them about $9,200 after the tax benefit, and their AGI drops from $70,000 to $60,000, keeping them well clear of IRMAA territory.

Example #2: Dan and Pam, age 74

Dan and Pam have no pension but receive $48,000 in Social Security benefits. Their IRA balance of $1.6 million generates an RMD of about $65,000 at the age-74 rate. They give $20,000 annually to their church and several ministries.

Without QCDs:

Although Dan and Pam give $20,000, their total potential itemized deductions ($20,000 charitable + $10,000 SALT + $8,000 medical) of $38,000 still fall short of the $47,500 standard deduction. They take the standard deduction, and their charitable giving produces no tax savings. Moreover, their MAGI of $113,000 is dangerously close to the 2026 IRMAA cliff of $218,000 for married filers, though it remains safely below.

With QCDs:

Tax savings: approximately $3,000 per year. Over a 20-year retirement, that’s roughly $60,000 in cumulative federal tax savings. Viewed another way, $20,000 in annual giving costs Dan and Pam only about $17,000 after tax. And their MAGI has dropped from $113,000 to $93,000, comfortably below the IRMAA threshold.

A note about the IRMAA Factor in 2026: For 2026, IRMAA surcharges begin at $109,000 MAGI for single filers and $218,000 for married couples filing jointly. Crossing a threshold adds $1,148 to $6,936 per person annually in Medicare Part B and Part D premiums. Because QCDs reduce AGI rather than providing a deduction, they directly lower MAGI — often the most powerful ancillary benefit of a disciplined QCD strategy.

My three-year experience with QCDs

Year 1 (2023): Getting started

I turned 70½ in April 2023 and made my first QCD in May, partly just to test the system. I ended up making about $12,000 in QCDs over those eight months, primarily through quarterly transfers to my church. The process through Fidelity was straightforward: an online form for charitable distributions, confirmation by email, and the church had seen this before. My tax reporting was simpler than I expected; it was just a notation of “QCD” on line 4b of the 1040.

Year 2 (2024): First full year

With a full year of eligibility, I made $16,000 in QCDs: $12,000 quarterly to my church, $2,500 to mission organizations, $1,000 to a seminary, and $500 to a local ministry. The estimated federal tax savings were about $3,800. My AGI remained well below the IRMAA threshold, and the lower provisional income reduced the portion of my Social Security subject to federal tax.

Year 3 (2025): First Year with RMDs

At 73, my RMDs began in earnest. My strategy: direct $20,000 via QCD (satisfying about two-thirds of my RMD and funding all of my charitable giving for the year), then take the remaining portion as a regular distribution for living expenses. Only that remaining amount appears as taxable income. The result is an effective federal tax rate well under 2% on my gross income, while giving away $20,000. That is faithful stewardship meeting wise tax planning.

What I Wish I Had Known from the Start

After three years of making QCDs, here are the things I would tell anyone just starting out:

You Can Give to Multiple Charities

I initially assumed a QCD had to be a single annual lump sum. Not at all. I now make quarterly gifts to my church and additional gifts to various ministries as opportunities arise throughout the year. Each gift counts toward the $111,000 annual limit.

Quarterly Timing Works Well

Rather than bunching giving at year-end, quarterly QCDs provide steady income to my church while leaving me flexibility for additional year-end giving to other ministries. My church treasurer appreciates the predictability.

Documentation Is Simple

Fidelity emails a confirmation for each QCD. The charity sends a thank-you letter (required by the IRS for any gift over $250). I keep both. At tax time, the 1099-R shows the full IRA distribution, and I note “QCD” on line 4b of the 1040 for the excluded portion.

The AGI Reduction Matters More Than the Direct Tax Savings

Lowering AGI is not just about the tax rate applied to that income. It cascades through the return in several ways: it affects how much of your Social Security is taxable, whether you trigger IRMAA surcharges, your eligibility for other income-tested benefits, and — under OBBBA — whether the new 0.5% floor on itemized charitable deductions would bite if you were an itemizer. The whole-picture benefit is larger than the line-item tax savings suggest.

It Simplifies Your Giving Strategy

Before QCDs, I spent mental energy weighing options: give cash, give appreciated stock, use a donor-advised fund? Now the answer is almost always QCDs because, for an IRA owner over 70½, nothing else comes close in terms of tax efficiency. The strategy is simple, the execution is simple, and the outcome is excellent.

Setting Up QCDs: The Practical Steps

Based on three years of experience, here is exactly how to do it:

Step 1: Verify Eligibility

Confirm you are 70½ or older — not just 70, but 70 and a half. Verify you have a Traditional IRA with your custodian.

Step 2: Contact Your IRA Custodian

Call or log in to your online account and ask about their QCD process. All major custodians handle these regularly. Fidelity has a dedicated online form (Accounts → Withdrawals → Charitable Giving). Schwab and Vanguard have similar online pathways; Vanguard may require a paper form for your first QCD.

Step 3: Gather Charity Information

You will need the charity’s legal name exactly as registered, its EIN (Employer Identification Number), and its mailing address. Confirm their 501(c)(3) status if needed — most churches and ministries qualify.

Step 4: Request the Distribution

Specify that this is a Qualified Charitable Distribution (QCD), provide the charity’s details, specify the amount, and request confirmation when it is sent. The custodian sends a check, either directly to the charity or to you for forwarding.

Step 5: Notify the Charity (Optional but Helpful)

Letting the charity know a QCD is on its way helps them track it correctly and ensures you receive proper written acknowledgment.

Step 6: Tax Reporting

Your 1099-R will show the full IRA distribution. On Form 1040, report the full amount on Line 4a (IRA distributions). On Line 4b (taxable amount), enter only the non-QCD portion. Write “QCD” next to Line 4b. Your tax software will guide you through this.

QCDs vs. Donor-Advised Funds: Different Tools for Different Purposes

Donor-Advised Funds and QCDs serve different purposes and are not really competing strategies — they complement each other.

QCDs are ideal when you are 70½ or older, have Traditional IRA funds, and want to make regular charitable gifts in a tax-efficient way. They reduce AGI directly, satisfy RMD requirements, bypass the new OBBBA restrictions on itemized deductions, and work even if you take the standard deduction.

DAFs are better suited for younger retirees (under 70½) who want to bunch charitable contributions, those with large one-time windfall income from a business sale or inheritance, people with significant appreciated securities to donate, or those who want to smooth their giving over multiple years while taking a deduction in a high-income year.

I don’t currently use a DAF because QCDs are more efficient for my situation. But if you have both IRA funds and non-IRA assets — particularly appreciated securities — a combination of QCDs from your IRA and a DAF for taxable account assets can be a powerful integrated giving strategy.

Why This Matters for Faithful Stewardship

At the end of the day, QCDs are not just a tax-planning technique — though saving thousands of dollars annually is nothing to dismiss lightly. They are an expression of faithful stewardship of the resources God has entrusted to us.

When my tax bill drops by $3,000 through QCDs, that is $3,000 I can redirect to additional ministry, build into margin for unexpected needs, or preserve as legacy for those who come after me. The same dollar that blesses my church through a QCD also reduces my taxable income, protects against Medicare surcharges, minimizes Social Security taxation, and satisfies my RMD requirement. It is genuinely a win-win-win-win situation.

As Paul wrote in 2 Corinthians 9:6–7: “The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.”

QCDs enable us to give bountifully and cheerfully, knowing we have used every legitimate tool to maximize kingdom impact. Whether you use QCDs, DAFs, cash, or appreciated securities, may we all “do good, to be rich in good works, to be generous and ready to share, thus storing up treasure for ourselves as a good foundation for the future, so that we may take hold of that which is truly life” (1 Tim. 6:18–19, ESV).

Summary: Why QCDs Should Be Your Default Giving Method After Age 70½

If you are 70½ or older with a Traditional IRA, here is my recommendation based on three years of personal experience: default to QCDs for essentially all your charitable giving unless you have a specific reason not to.

The Case For

• Tax-free distribution from your IRA
• Reduces AGI — not just taxable income
• Satisfies RMD requirements
• Works even with the standard deduction
• Avoids additional Social Security taxation on that income
• Helps avoid IRMAA surcharges
• Bypasses the new OBBBA 0.5% floor and 35% cap for itemizers
• Simple to execute; easy to document
• Flexible: give to multiple charities, any time during the year

The Limitations

• Must be 70½ or older
• $111,000 per person annual limit in 2026 (generous for most)
• Must go to public 501(c)(3) charities — not private foundations, DAFs, or supporting organizations
• Must be a direct transfer from the IRA — cannot pass through your hands first

My Personal Results After Three Years

Action step: If you are approaching 70½ or are already eligible, contact your IRA custodian this week to learn their QCD process. Your future self — and your church or favorite ministries — will thank you.

Note:

This article provides general educational information about QCDs. Tax laws are complex and subject to change. Figures reflect 2026 law as of the date of publication. For advice specific to your situation, consult a qualified tax professional or CPA specializing in retirement tax planning.