How to Give Smarter This Holiday Season: The IRA Strategy Every Retiree Should Know

As we enter the holiday season, generosity is on everyone’s mind. If you’re age 70½ or older, there’s a unique opportunity to give back — and receive a valuable tax benefit in return.

A Qualified Charitable Distribution 2025 (QCD) allows IRA owners to donate directly to a qualified charity. This strategy not only supports the causes you love but can also reduce your taxable income and satisfy your Required Minimum Distribution (RMD).

Let’s explore how QCDs work in 2025, why they matter, and how you can make the most of this powerful giving strategy before year-end.

What Is a Qualified Charitable Distribution (QCD)?

A QCD is a direct transfer of funds from your IRA to a qualified charitable organization. Unlike a regular withdrawal, the amount you donate through a QCD does not count as taxable income.

• You must be at least age 70½ at the time of the donation.
• The maximum annual QCD limit for 2025 is $108,000 per individual.
• You can give from a Traditional IRA, inactive SEP or SIMPLE IRA, or a Roth IRA (using pre-tax funds).
• QCDs cannot come from employer-sponsored plans like 401(k)s.

Quick Tip: Both spouses can each make a QCD from their own IRAs, effectively doubling the family’s charitable impact.

The Qualified Charitable Distribution 2025 Rules You Need to Know

Here are the updated guidelines from the IRS and major custodians like Fidelity and Schwab for Qualified Charitable Distributions in 2025:

1. Direct Transfer Required

To qualify, the transfer must go directly from your IRA to the charity.
A check payable to the charity but sent to you (the IRA owner) still qualifies, but if you cash it first and then donate, it will not be considered a QCD.

2. Qualifying Charities Only

The charity must be a qualified 501(c)(3) organization.
You cannot make QCDs to:

• Donor-advised funds
• Private foundations
• Supporting organizations

However, QCDs can now go to “split-interest entities” (such as a charitable remainder trust or charitable gift annuity) — up to $54,000 once per lifetime.

3. QCDs Can Satisfy RMDs

A QCD can count toward your Required Minimum Distribution (RMD) once you turn 73 — but you can make QCDs as early as 70½, even before RMDs begin.

This can help reduce future RMD amounts and lower long-term tax exposure.

4. Reporting and Tax Treatment

Your IRA custodian will report the QCD as a regular distribution (Form 1099-R). You must note it on your tax return as a QCD to exclude it from taxable income.
You cannot also claim a charitable deduction for a QCD.

Why Qualified Charitable Distributions 2025 Are a Smart Giving Strategy

✅ Reduce Your Taxable Income

Unlike itemized deductions, a QCD lowers your Adjusted Gross Income (AGI) directly — which can also help reduce taxes on Social Security and Medicare premiums.

✅ Fulfill RMD Requirements

By donating through your IRA, you can meet RMD obligations without increasing taxable income.

✅ Support Causes That Matter

Whether it’s your church, alma mater, or a local nonprofit, QCDs help you give meaningfully and efficiently.

New for 2025: Lifetime Income & QCDs

Under the SECURE 2.0 Act, you can make a one-time QCD (up to $54,000) to a charitable gift annuity or charitable remainder trust.

This allows you to:

• Support a charity
• Receive lifetime income for yourself or your spouse
• Satisfy your RMD for the year

It’s a powerful combination of legacy planning and retirement income strategy — perfect for generous retirees who also want financial security.

How to Start Your Qualified Charitable Distribution in 5 Easy Steps

Ready to get started? Download our free guide:
🎁 Navigating Qualified Charitable Distributions in 5 Easy Steps

This step-by-step resource walks you through choosing a charity, coordinating with your IRA custodian, and ensuring your gift meets IRS rules.

Talk With a Trusted Advisor Before You Give

A QCD can be an incredibly effective way to give — but timing, tax rules, and paperwork matter.
Our team at RFG Wealth Advisory can help you:

• Ensure your charity qualifies
• Structure the QCD for maximum tax benefit
• Integrate your giving strategy into your long-term retirement plan

📞 Call us today at 940-464-4104, or
💻 Schedule a free virtual consultation

RFG Wealth Advisory is a fee-only, Registered Investment Advisory firm located in North Texas. We always put our client’s interests first and have a clear, simple fee structure that’s easy to understand.

Financial success doesn’t happen by chance — it happens by design.

Let’s make your giving count this holiday season.