5 Things You Need to Know About 2025 Qualified Charitable Distributions

IRA Analyst

If you are thinking about doing a qualified charitable distribution (QCD) for 2025, time is running out. The deadline is December 31, 2025. Many people miss out on this valuable tax break.

Here are 5 things you need to know about 2025 QCDs:

1. Your QCD must be done as a direct transfer from the IRA to the charity of your choice. If a distribution is paid to you, you cannot give those funds to the charity and call it a QCD. However, a check made payable to the charity that is mailed to you and delivered by you to the charity will work as a QCD.The IRS has introduced a new Code Y on Form 1099-R for IRA custodians to indicate a QCD.
2. The amount transferred from the IRA to charity as a QCD counts toward your required minimum distribution (RMD). Using a QCD to satisfy your RMD can reduce adjusted gross income (AGI).
3. The per-year limit is $108,000 per person. If you are married and you and your spouse both qualify, you can each do QCDs totaling $108,000 annually. A tax deduction for the charitable contribution cannot also be taken. You can still do a QCD of $108,000 even if your RMD for 2025 is less.
4. You can do a QCD if you are an IRA owner or beneficiary and you are 70½ years old or older. While the SECURE Act and the SECURE 2.0 Act have raised the age that RMDs must be taken to age 73, the age for QCDs remains at 70½. You can do a QCD from your IRA, Roth IRA or inactive SEP or SIMPLE IRA. QCDs are not available from any employer plans. QCDs apply only to taxable amounts in your IRA. This is an exception to the pro-rata rule that usually applies to traditional IRA distributions. Only taxable amounts in a Roth IRA will qualify (i.e., the earnings that have not yet met the age 59½ age limit and 5-year holding period).
5. You cannot receive anything in return for the donation. No free tickets, tote bags or mugs are allowed. Gifts to donor advised funds or private foundations do not qualify as a QCD.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.