Qualified Charitable Distribution (QCD)
Donating directly from an IRA after age 70½ — the amount is excluded from taxable income and can count toward your required minimum distribution.
A QCD lets those 70½ or older send up to an annual limit straight from an IRA to charity, counting toward required minimum distributions while keeping the amount out of adjusted gross income entirely. Because it lowers AGI rather than acting as a deduction, it can also ease IRMAA and other income-tested thresholds. It's often more tax-efficient than writing a check.
Giving straight from your IRA
A qualified charitable distribution lets someone age 70½ or older transfer money directly from an IRA to a qualified charity — up to an annual limit (inflation-indexed) — without the distribution ever hitting their taxable income. The key is “directly”: the funds must go from the IRA custodian to the charity, not through your hands first.
Why lowering AGI beats a deduction
A QCD isn't a deduction — it excludes the amount from adjusted gross income entirely, which is more valuable because AGI feeds so many other thresholds. It can satisfy part or all of your required minimum distribution, and because it keeps income off the top of your return, it can ease IRMAA Medicare surcharges, the taxation of Social Security, and other income-tested limits. For retirees who take the standard deduction, it's often more tax-efficient than writing a check and trying to deduct it.
How Formation handles it
Formation keeps your IRA balances, RMD picture, and income thresholds in one view, so a QCD that would satisfy an RMD while holding your AGI below an IRMAA cliff is something you can see and plan. The distribution itself is arranged with your custodian and CPA; Formation shows where it fits.
A worked example
You're 73 with a $40,000 required minimum distribution and you give $20,000 to charity anyway. Send that $20,000 straight from your IRA as a QCD and it counts toward your RMD while staying out of your AGI entirely — potentially keeping you under an IRMAA threshold that a normal withdrawal-plus-donation would have pushed you over.
Frequently asked
Who can make a qualified charitable distribution?
IRA owners who are at least 70½ at the time of the gift. The funds must transfer directly from the IRA custodian to a qualified charity, and there's an annual per-person limit that's indexed for inflation.
Does a QCD count toward my required minimum distribution?
Yes. A QCD can satisfy part or all of your RMD for the year while excluding that amount from taxable income — which is exactly what makes it more efficient than taking the RMD as income and separately donating cash.
See this in your own numbers.
Formation organizes your whole household by entity and cites every figure to its source — the context that makes terms like this actionable.
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