Qualified Charitable Distribution (QCD)
A direct transfer from an IRA to a qualified charity by a taxpayer age 70 and a half or older, satisfying the RMD without inclusion in taxable income.
Detailed Explanation
QCDs are limited to $108,000 per taxpayer (2025, indexed). The transfer goes directly from the IRA custodian to the charity (a 501(c)(3) public charity, not a donor-advised fund or supporting organization in most cases). The QCD satisfies the RMD requirement and reduces AGI rather than producing an itemized deduction, which is more valuable than a Schedule A deduction for most retirees. SECURE 2.0 added a one-time $54,000 QCD option to fund a charitable gift annuity or charitable remainder trust.
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Learn about Tax Planning & StrategyRelated Terms
Required Minimum Distribution (RMD)
The annual minimum amount that must be withdrawn from most retirement accounts after a specified age, taxed as ordinary income.
Itemized Deductions
Specific deductions claimed on Schedule A in lieu of the standard deduction, including state and local tax, mortgage interest, charitable contributions, and medical expenses.
Adjusted Gross Income (AGI)
Adjusted Gross Income is your total gross income reduced by specific above-the-line deductions, used as the starting point for calculating your federal taxable income.
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