Do Good with Your IRA and Pay Zero Tax on Your Required Minimum Distributions
Required Minimum Distributions (RMD) from IRAs can be a burden for taxpayers, by raising your annual income levels and possibly boosting you into a higher tax bracket. Using the Qualified Charitable Distribution (QCD) Rule, there is a way for IRAs to do good. This rule allows IRA owners to exclude their RMDs from their annual income if given to a qualified charitable organization. Essentially, owners can deduct their RMDs on their tax returns if they give the money to a charity.
UPDATE (NOV 2026)
A QCD is excluded from your income; it is not taken as an itemized deduction. QCDs are still available from age 70½, but required minimum distributions now start at age 73 (rising to 75 in 2033) under the SECURE 2.0 Act. (Source: CRS; IRS)
KEY BENEFIT
A key benefit to the QCD is you pay zero tax on the distribution. That’s right, it’s a tax free distribution to a charity. You win, the charity wins, and the IRS loses.
The QCD Rules
Some of the rules and regulations are as follows:
- ✓You MUST be age 70½ or older on the date of the distribution.
- ✓The maximum annual exclusion per individual is $111,000 (2026).
- ✓The charity must qualify as a 501(c)(3) organization and be eligible to receive tax-deductible contributions.
- ✓Each check will be made payable to the qualified charity and list your name as donor. Note: You should follow up with the charity directly for a receipt of your donation.
To break it down further, the charitable organization must qualify as a 501(c)(3) organization, which means it is federally tax exempt as a non-profit organization. Of course the owner of the IRA can give a larger sum than $111,000 (2026) to the charity of their choosing, though any excess distributions will not be excluded from their Adjusted Gross Income (AGI).
DON’T FORGET
It is also very important to obtain a receipt from the selected charity for tax purposes.
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Mat has been at the forefront of the self-directed IRA industry since 2006. He is the CEO of Directed IRA & Directed Trust Company where they handle all types of self-directed accounts (IRAs, Roth IRAs, HSAs, Coverdell ESA, Solo Ks, and Custodial Accounts) which are typically invested into real estate, private company/private equity, IRA/LLCs, notes, precious metals, and cryptocurrency. Mat is also a partner at KKOS Lawyers and serves clients nationwide from its Phoenix, AZ office.
He is published regularly on retirement, tax, and business topics, and is a VIP Contributor at Entrepreneur.com. Mat is the best-selling author of the most widely used book in the self-directed IRA industry, The Self-Directed IRA Handbook: An Authoritative Guide for Self-Directed Retirement Plan Investors and Their Advisors.
