A required minimum distribution (RMD) is the amount the IRS requires you to withdraw each year from most pre-tax retirement accounts once you reach the starting age, and it is taxed as ordinary income. A qualified charitable distribution (QCD) is a transfer from an IRA directly to a charity, allowed from age 70 and a half. A QCD counts toward your RMD but is left out of your taxable income, which often makes it a more tax-efficient way to give than writing a check.
When do RMDs start?
Under the SECURE 2.0 Act, RMDs begin at age 73 for people born from 1951 through 1959, and at 75 for people born in 1960 or later. Your first RMD can be delayed until April 1 of the year after you reach that age, but then you take two in the same year, which can push income into a higher bracket.
RMDs apply to traditional IRAs, SEP and SIMPLE IRAs, and most employer plans such as 401(k)s and 403(b)s. Roth IRAs have no RMDs for the original owner, and since 2024, Roth accounts in employer plans do not either. If you are still working and do not own 5% or more of the company, you can usually delay RMDs from your current employer's plan until you retire.
How is the RMD calculated?
Take the account balance on December 31 of the prior year and divide it by a factor from the IRS Uniform Lifetime Table for your age. The factor shrinks as you age, so the share you must withdraw grows. If your spouse is your sole beneficiary and more than ten years younger, a different table gives a smaller RMD. You can take the total RMD for all your IRAs from any one of them, but employer plan RMDs generally have to come from each plan.
What happens if you miss one?
The penalty is 25% of the amount not withdrawn, reduced to 10% if you correct it in a timely way, generally within two years. Before SECURE 2.0 it was 50%.
RMDs are the IRS's schedule. A QCD lets the charity share it with you.
What is a qualified charitable distribution?
A QCD is a direct transfer from your IRA to a qualifying charity. The rules:
- Age 70 and a half or older on the date of the transfer. Note that this is earlier than RMD age.
- From an IRA, not a 401(k) or other employer plan. Money in a plan can be rolled to an IRA first.
- Paid directly to the charity. If the money passes through your hands, it is a taxable withdrawal followed by a gift.
- To a public charity. Donor-advised funds and private foundations do not qualify.
- Up to an annual limit, indexed for inflation since 2024. For 2026 it is $111,000 per person (IRS, Notice 2025-67, November 2025). A married couple can each give up to the limit from their own IRAs.
Why is a QCD better than taking the RMD and giving cash?
Because a QCD never enters your adjusted gross income (AGI). That matters in several ways.
- You get the benefit without itemizing. Most retirees take the standard deduction, so a cash gift gives them little or no deduction. A QCD reduces income directly.
- Lower AGI ripples. Medicare premiums, the taxable share of Social Security benefits, and some other thresholds are based on income that includes AGI. A QCD can keep you under them.
- New 2026 limits on deductions. Starting in 2026, itemized charitable gifts count only above 0.5% of the contribution base, which for most people is AGI. People who do not itemize can deduct up to $1,000 of cash gifts, or $2,000 on a joint return, though not gifts to a donor-advised fund. A QCD is not affected by the floor and needs no deduction at all (Internal Revenue Code sections 170(b)(1)(I) and 170(p), added by Public Law 119-21, July 2025).
- Utah follows. Utah's income tax starts from federal AGI, so a QCD also reduces the income Utah taxes, and can help with Utah credits that phase out with income.
What trips people up?
- Timing within the year. The first dollars out of an IRA in a year count toward the RMD. If you take your RMD in January and make a QCD in December, the QCD does not undo the January withdrawal.
- Reporting. Your IRA custodian reports the full distribution on Form 1099-R. You report the QCD on your return so it is excluded. Keep the charity's written acknowledgment.
- Deductible IRA contributions after 70 and a half. Contributions made after that age can reduce the amount of QCDs that are tax-free.
- Checks that clear late. A QCD check that the charity has not cashed by December 31 can be counted in the wrong year. Year-end gifts need lead time.
A hypothetical example
Hypothetical. A widowed Utah retiree, age 75, has an RMD this year and gives a similar amount each year to her church and a local food bank. She takes the standard deduction. If she withdraws her RMD and writes checks, the full RMD is taxable and the gifts give her no deduction. If she instead directs her IRA custodian to send her usual gifts straight to the two charities as QCDs before taking any other withdrawal, those amounts satisfy part of her RMD and never enter her income. Her gifts are the same. Her taxable income is lower.
How do RMDs fit the bigger plan?
RMDs are easier to manage when planning starts years before they begin. Roth conversions in the years after retirement, and drawing some pre-tax money early, can make later RMDs smaller. QCDs then handle part of what remains for households that give. Our retirement planning page describes how we model this year by year, so RMDs do not end up setting your tax bracket for you.
Educational only. Not investment, tax, or legal advice. Every situation is different; the right answer depends on the numbers, and that's what the strategy session is for. Investing involves risk, including possible loss of principal.