How to Give Charitably via an IRA Qualified Charitable Distribution

If you:

• Are 70 1/2 years young or up;

• Own a taxable individual retirement account (IRA), such as a traditional IRA or inherited IRA, or even a SEP or SIMPLE IRA that no longer receives contributions;

• Give charitably, but usually donate using cash;

• And want to earn key charitable tax benefits...

This message is for you!

Through your IRA, you can initiate an "IRA qualified charitable distribution" when you reach age 70 1/2, allowing you to donate a total of up to $111,000 directly to 501(c)(3) charitable organizations from your IRA while defraying your required minimum distribution (RMD).

By having a check sent directly from your IRA to the charity (and not personally accepting and depositing an IRA payout first), you avoid taking annual income from your IRA, thus potentially saving you from a bump into a higher income tax bracket.

Here are a few sample scenarios to consider for using an IRA QCD (or QCD for short, and sometimes also known as an IRA charitable rollover):

• If you are looking to start an endowment fund with the JCF to ensure your charitable cause of choice receives annual income for future generations;

• If you want to fulfill your yearly contribution to the Jewish Federation of Southern New Jersey's JFund (Annual Campaign);

• If you'd like to pay your annual synagogue dues;

In short, a QCD through your IRA enables you to avoid donating from your checking account or credit card, and instead you can reduce income that you would have to take as your RMD in a given year.

Summer is a good time to start planning how you will use your IRA for a QCD since it can take a bit of time to process the donation through your IRA provider, and you may need to determine how much you plan to give for the year based on the maximum of $111,000.

From the IRS website as of 2025 (edited to show the 2026 maximum annual exclusion dollar amount, adjusted for inflation):

Qualified charitable distributions (QCDs). A QCD is generally a nontaxable distribution made directly by the trustee of your IRA (other than an ongoing SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions. You must be at least age 70½ when the distribution is made. Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution. See Substantiation Requirements in Pub. 526. The maximum annual exclusion for QCDs is $111,000. Any QCD in excess of the $111,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $111,000. The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income.

Caution: You can't claim a charitable contribution deduction for any QCD not included in your income.

Ready to get started? If you would like to contribute to an endowment fund with the JCF using an IRA QCD or if you have other questions about an IRA QCD, please contact JCF Assistant Director David Snyder at 856-673-2571 or dsnyder@jfedsnj.org.

Please note: The JCF does not provide accounting, financial, or legal advice. Consult your trusted advisor as needed.