top of page

Qualified Charitable Distributions: Maximize Your Giving and Reduce Taxes

Did you know you can support The Friendship Center with a qualified charitable distribution (QCD) from your retirement account? To explain the benefits of QCDs for IRA owners and offer an example of how they might work for you, we asked local financial advisor Daniel Trost to break it down.


By Daniel Trost CFP®, CWS®, Senior Vice President and Financial Advisor at Trost Wealth Management, a service of D.A. Davidson & Co

Are you an IRA owner aged 70 ½ or older who is passionate about supporting charitable causes? Then, Qualified Charitable Distributions (QCDs) might be a good tool for you to consider.

QCDs can help you:

  • Reduce your taxable income. By donating directly from your IRA to a qualified charity, the distributed amount is not included in your taxable income.  This is especially helpful for those who do not itemize for their federal tax returns (about 87% of taxpayers under current tax law). 

  • Fulfill your required minimum distributions (RMDs). Individuals over 73 must withdraw a minimum amount from their IRA each year. QCDs can count towards your RMD, helping you satisfy this requirement while giving back.

  • Increase your charitable impact. By reducing your taxable income through QCDs, you might find yourself with more available funds to donate, allowing you to support your favorite charities even more.

An Example of QCDS in Action

Imagine Sarah, a 75-year-old retiree with a traditional IRA. Sarah is in the 24% tax bracket and takes the standard deduction. Her RMD for the year is $10,000, and she wants to donate $5,000 to The Friendship Center.

By making a $5,000 QCD from her IRA directly to the shelter, Sarah:

  • Reduces her taxable income by $5,000, reducing her taxes by $1,200.

  • Fulfills a portion of her RMD requirement.

  • Has the option to increase her donation to $6,200 at the same out-of-pocket cost.

Qualifications and Limitations for QCDs

The annual limit for QCDs in 2024 is $105,000 ($210,000 for married couples filing jointly). Only distributions from traditional IRAs, inherited IRAs, and inactive SEP, and SIMPLE IRAs qualify for QCDs.


This material is being provided for educational and informational purposes only and is not intended to provide tax advice. You should consult with your personal tax advisor for advice before making any decisions.


bottom of page