How Qualified Charitable Distributions Can Help with Your RMDs in 2026

As retirement planners, we get to look at the whole picture. We like to keep up on industry trends for our clients, as they navigate preparing for and receiving the best options in retirement. We recently managed a Qualified Charitable Distribution (QCD) for a client and thought we should share what we learned.

For many retirees in Decatur and surrounding communities, Required Minimum Distributions (RMD) can feel like one more thing to keep track of in retirement. After years of saving in your IRA or 401k, the IRS eventually requires you to start taking money out—and those withdrawals are counted as taxable income.

However, there is a powerful tool that can help meet your RMD requirement and potentially lower your taxable income at the same time: the Qualified Charitable Distribution (QCD).

What Is a Qualified Charitable Distribution?

A Qualified Charitable Distribution is a direct transfer from your IRA to a qualified public charity. When done correctly, the money goes straight from your IRA custodian to the charity—never passing through you first. The QCD we recently managed was being distributed to the client’s church, but it can go to any 501(c)(3) public charity.

You must be 70½ years of age or older to make a QCD, even though RMDs now begin later (age 73 or 75 depending on your birth year).  

When a QCD follows IRS rules:

• It counts toward your annual RMD,
• It is excluded from your taxable income, and
• You cannot deduct it as a charitable contribution, because it was never included in income to begin with.

For many retirees, reducing taxable income is more valuable than receiving a deduction, especially under the new 2026 tax rules.

QCD Limits in 2026

The annual QCD limit increases periodically with inflation, and 2026 brings updated thresholds.

Different well‑known financial sources show slightly different inflation‑adjusted figures for 2026, mostly because they were published at different times:

• $111,000 annual limit per person (Schwab and Elliott Davis)
• $105,000 annual limit per person (RichDadRetirement guide)

Because IRS guidance can change, retirees should have a conversation with their tax professional to confirm the exact limit applied to their year’s distribution.

Who Can Use QCDs?

• You are age 70½ or older at the time the distribution leaves the IRA.
• The distribution comes from a traditional IRA, inherited IRA, or an inactive Simple Employee Pension plan (SEP) or inactive Savings Incentive Match Plan for Employees (SIMPLE) IRA.
• The check is made payable directly to a qualified 501(c)(3) charity.

QCDs cannot be made from:

• Active SEP or active SIMPLE IRAs.
• 401(k), 403(b), or 457 plans (unless rolled to an IRA).
• Donor‑advised funds.
• Private foundations.

This prevents QCDs from being used for charitable vehicles that do not qualify for this exclusion from taxable income.

How QCDs Can Reduce Your RMD Burden

Many retirees find their RMDs begin to feel larger as their IRA balances grow. That can push income higher, sometimes affecting Medicare IRMAA (Income‑Related Monthly Adjustment Amount) surcharges, Social Security taxation, or overall tax brackets.

A QCD helps manage this by:

• Reducing taxable income by excluding your charitable gift,
• Reducing future RMDs by lowering IRA balance over time,
• Satisfying your RMD (if in the same year the distribution is made).

Even retirees who do not rely on their full RMD for living expenses often appreciate the opportunity to give intentionally, support causes they care about, and maintain better control over year‑to‑year tax exposure.

Example

Here’s a simplified illustration based on 2026 QCD guidance, using numbers we made up for easy math:

A retiree has a $100,000 RMD for the year. They give $50,000 directly to a qualified charity using a QCD.

Because that portion never enters their taxable income:

• Only the remaining $50,000 is taxed,
• Their adjusted gross income is lower (potentially reducing Medicare premiums),
• They do not need to itemize to receive the tax benefit, and
• They avoid the new AGI threshold and charitable deduction cap.

This gives them clearer cost expectations for the year and greater peace of mind.

Is a QCD Right for You?

Every situation is different, and nothing here should be considered tax or legal advice. As part of your retirement planning, a QCD can be a steady, predictable tool for managing income in retirement.  

A QCD may be helpful if:

• You already give to charities each year,
• You don’t need all of your RMD for everyday expenses,
• You want a straightforward way to reduce taxable income without dealing with itemized deductions.

Conclusion

If you are wondering whether a QCD might make sense for you, it can help to talk it over with your retirement advisor. They can walk you through how your RMD works and explain your options in simple terms.