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What is a qualified charitable distribution (QCD)?

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If you are 70½ or older, you can use your IRA assets to create a fund that supports your favorite charities. This is accomplished through a qualified charitable distribution (QCD). QCDs can be especially attractive for retirees or individuals with an inherited IRA, since they satisfy required minimum distribution (RMD) rules while also providing potential tax benefits.

To make the most of these accounts, it's worth digging into the details of how QCDs work, which charities qualify, and the pros and cons of using them.

What is a qualified charitable distribution?

Qualified charitable distributions are tax-free donations to specified charities that count toward retirees' annual required minimum distributions. Individuals who are 70½ years of age or older can make tax-free QCDs of up to $100,000 per year from their individual retirement accounts (IRAs).

QCDs—also known as IRA charitable rollovers—enable individuals to satisfy their RMDs through charitable giving. The money you donate to charity is classified as a direct transfer, which enables the contribution to avoid taxation. The custodian of your IRA can send a check directly to the charity; alternatively, the custodian can send the check (payable to the charity) to you if you'd like to deliver the check yourself.

Since IRA owners age 70½ or older and individuals with inherited IRAs must make RMDs, which are normally taxable, a QCD can make financial sense. In other words, the reason why someone would choose to make a QCD is to reduce taxable income with a distribution that would otherwise be taxable.

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Charitable Strategies: Qualified Charitable Distributions QCD

Charities that qualify for a QCD

Charities that qualify for a QCD are IRS-recognized entities known as 501(c)(3) organizations. To verify whether a particular charity qualifies for QCD, begin your search with the IRS tax-exempt organization search tool. You must make your QCDs by December 31 of the respective tax year in order for them to count toward your annual RMD.

Charities that do not qualify for a QCD

Some entities are involved with charitable giving but do not qualify for a QCD, including:

  • Donor-advised funds.These are vehicles created to manage charitable donations on behalf of charitable organizations.
  • Private foundations. Although these foundations may receive some public funding, they are typically funded privately from one individual or a small group of people.
  • Supporting organizations. These entities may support public charities, but they are not IRS-recognized entities themselves.

Types of IRAs that are eligible for QCDs

A QCD may go to an eligible charity from the following types of individual retirement accounts:

  • Traditional IRA
  • Inherited IRA
  • Inactive Simplified Employee Pension (SEP) IRA
  • Inactive Savings Incentive Match Plan for Employees (SIMPLE) IRA

Pros and cons of a QCD

QCDs are not right for every situation, so consider both the potential pros and cons of using QCDs.


  • Tax benefits. QCDs can provide tax advantages by lowering your adjusted gross income (AGI). This, in turn, can help offset other taxes—like Social Security.
  • Donate to charity. Some decisions are about more than finances. Not only can you reap some tax benefits, you'll also make a difference in the world by contributing toward your favorite qualifying charities.


  • Not available to all taxpayers. Only IRA owners ages 70½ and older may make QCDs.
  • Limits on contributions. The maximum QCD is $100,000 total per year.

Potential tax benefits of a QCD

QCDs are distributions from an IRA that are not included in your adjusted gross income. This unique feature enables several potential tax benefits, such as:

  • Making RMD and reducing tax at the same time. By reducing otherwise taxable IRA distributions, QCDs can reduce your adjusted gross income (AGI) while also satisfying the RMD amounts required by the IRS for individuals 72 and older.
  • Avoiding higher tax brackets. Since QCDs reduce taxable income, they can help bring an individual or household into a lower tax bracket, thereby creating more tax savings.
  • Avoiding higher Medicare premiums. Making a QCD reduces your modified adjusted gross income for Medicare purposes. In 2023, most people will pay a $164.90 monthly premium for Medicare Part B. However, single tax filers with incomes over $97,000 and joint filers with income above $194,000 pay premiums ranging from $230.80 up to $560.50.

Making these unique charitable contributions can provide multiple advantages—still, QCDs are not right for everyone. To gain a deeper understanding of QCDs and how they may fit into your financial situation, reach out to a local Thrivent financial advisor for assistance.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Thrivent Charitable Impact & Investing™ is a public charity that serves individuals, organizations and the community through charitable planning, donor-advised funds and endowments. Thrivent Charitable Impact & Investing works collaboratively with Thrivent and its financial advisors. It is a separate legal entity from Thrivent, the marketing name for Thrivent Financial for Lutherans.