The Tolleson Wealth Management Guide to Qualified Charitable Distribution Rules After 70½

At 70½ the rule starts: the accounts, limits and charities that count

Plenty of retirees believe any gift made with IRA money is a qualified charitable distribution. It isn't. A QCD exists only when the IRA custodian pays the charity directly, and the owner or beneficiary must already be 70½ on the date of the distribution. Turning 70½ later in the same year is not enough.

The amount sent is left out of adjusted gross income, which is the whole point. From age 73 it also counts toward the required minimum distribution (RMDs start at 75 for anyone born in 1960 or later). The annual cap is indexed, so check the current IRS limit and don't rely on a number you remember.

Donor-advised funds, private foundations and supporting organizations can't receive a QCD. The charity still sends a written acknowledgment, and you keep it with your tax paperwork even though you take no deduction for the gift. One anti-abuse rule matters here: deductible traditional IRA contributions made after age 70½ reduce the amount of later QCDs that can be excluded from income.

Tolleson Wealth Management sorts this account by account. Only the IRA can fund a QCD, and the 403(b) row is a dead end until the money is rolled over.

Who counts and when

What the IRS lets you exclude

Can I give from my 403(b), or only from an IRA?

A QCD can come only from an IRA: traditional, inherited or Roth, though a Roth gift saves no tax. It can't come from a 403(b) or 401(k), or from a SEP or SIMPLE IRA that still receives employer contributions.

Many retirees assume the 403(b) works too, since it holds the same pre-tax money. A retiree like Astrid would have to move that money into her IRA before 70½ to give from it. Our 401(k) rollover page covers how that transfer works. Don't wait until the year you want to give, because paperwork between custodians can take weeks.

Checks, a donor-advised fund or a QCD: three ways to give $8K a year

Three realistic ways to give $8K a year behave differently on a tax return, and only one lowers AGI itself. Writing checks from checking and refilling the account from the IRA adds the refill to income. A donor-advised fund lets you make two or three years' worth of gifts in a single year so you clear the standard deduction and itemize. A QCD sends IRA money straight to the charity after 70½.

For illustration, hypothetical Astrid at 71 expects a $24K state pension, $30K of Social Security (85 percent taxable, so $25.5K) and $52K of IRA withdrawals for living costs and travel. She gives $8K a year. If she pays by check, she has to pull $8K more from the IRA: $24K + $60K + $25.5K = $109.5K of MAGI. That is just over the $109,000 single IRMAA line in the CMS schedule, so two years later Part B costs $284.10 a month instead of $202.90. The gap is $81.20 a month, or $974.40 for the year. If she sends the $8K as a QCD, her MAGI stays at $101.5K.

One decision is still open. At 68 and 69 she can't use a QCD, so she must either keep giving by check or wait and give more after 70½. Low income in those two years would tip her toward giving now.

A deduction for cash gifts, including any deduction for people who don't itemize, is taken after AGI. It therefore can't move the IRMAA line. A QCD lowers AGI itself, and that's the real advantage for a retiree who takes the $16,100 single standard deduction for 2026.

Astrid's travel withdrawals rise and fall with her guardrails, so in a strong market year her MAGI can drift toward an IRMAA line. Tolleson Wealth Management sets the QCD amount after it knows that year's travel draw, so the gift isn't fixed in January. Our calculator runs the same arithmetic with your own numbers, and keep in mind that a weak market can shrink the IRA the gifts come from.

Astrid at 71: the numbers

Why a deduction can't do the same job

Am I planning this too early at 58, or right on time?

At 58 you're right on time to build the pre-tax money that later funds gifts, even though QCDs themselves start at 70½. Catch-up contributions in your 50s and early 60s ($8,000 in a 401(k) or 403(b) at 50 and older, $1,100 in an IRA, for 2026) add to that balance.

At 73, or 75 if you were born in 1960 or later, RMDs begin and a QCD can cover part of them. Assuming 5 percent a year, for illustration, $50K set aside at 58 grows to about $89.8K by 70 ($50K × 1.05^12), and none of that growth has been taxed.

Should I run a QCD checklist before my custodian's December cutoff?

Yes. Run it before your custodian's December cutoff, which is often earlier than December 31, the legal deadline. Five checks cover your age, the account, the charity and two questions for the custodian and your CPA, and each takes a phone call or a look at a statement.

Every year runs in the same order. Many custodians stop accepting charity checks before the end of December, so ask yours. In January the 1099-R arrives showing the full gross distribution, with no QCD shown separately. At filing time you or your CPA write 'QCD' next to the IRA line on Form 1040. Medicare bases each year's premium on the MAGI reported two tax years before, so the gift Astrid makes at 71 shows up in her premium at 73.

Two small slips often show up in the same year. One is taking the IRA money into checking before writing the charity check. The other is not telling the tax preparer. The first turns the gift into a taxable withdrawal. The second means a 1099-R showing the full amount gets taxed with no QCD notation. On Astrid's hypothetical numbers, $8K taxed at an assumed 22 percent is $1,760 on that year's return. The $974.40 premium jump follows two years later, for about $2,734 in total from one mistake.

A QCD does nothing for anyone under 70½, and it can't fund a donor-advised fund. A retiree who itemizes and holds highly appreciated stock in a brokerage account may come out ahead by giving the shares, so compare that option before defaulting to the IRA.

Dates that repeat every year

The five checks

• Am I 70½ on the planned distribution date?
• Is the money in an IRA, not in a 403(b) or an active SEP?
• Is the charity a public charity, not a donor-advised fund?
• Ask the custodian: what is your December cutoff, and will you mail the check to the charity or to me?
• Ask the CPA: how will you mark the QCD, given that my 1099-R shows the full amount?

Your first QCD with Tolleson Wealth Management starts with the IRMAA line

The first thing Tolleson Wealth Management looks at is how far your projected MAGI sits below the next IRMAA tier, after that year's guardrail-adjusted withdrawals. Next comes which accounts can actually send a QCD. The amount of the gift and its timing are written into your playbook before December. Checks fit you at 68, a donor-advised fund fits an itemizer holding appreciated stock, and a QCD fits a 70½-plus standard-deduction filer near a line. Whether a premium drops depends on this year's income, and the lower premium shows up two years later.