3997 / What is a charitable IRA rollover or qualified charitable distribution?

Editor’s Note: The SECURE Act 2.0 contained a new rule that expands the availability of charitable giving with retirement funds. Under the new law, taxpayers will be allowed to make a one-time qualified charitable distribution of up to $50,000 from an IRA to a charitable remainder annuity trust, charitable remainder unitrust or charitable gift annuity. To qualify, charitable remainder annuity trusts and charitable remainder unitrusts must be funded solely with qualified charitable distributions. Charitable gift annuities be funded exclusively by qualified charitable distributions and commence fixed payments of five percent or greater not later than one year from the date of funding. The new law also indexes the current limit for qualified charitable distributions to inflation for tax years beginning after 2022.A taxpayer age 70½ or older is permitted to make a qualified charitable distribution (QCD) from a traditional IRA or Roth IRA that is not includable in the gross income of the taxpayer.¹ The exclusion for qualified charitable distributions generally is available for distributions from any type of IRA (including a Roth IRA described in Section 408A and a deemed IRA described in Section 408(q)) that is neither an ongoing SEP IRA described in Section 408(k) nor an ongoing SIMPLE IRA described in Section 408(p).²

The provision permitting a qualified charitable distribution to be excluded from gross income was allowed to expire at the end of 2011, but the American Taxpayer Relief Act of 2012 (“ATRA 2012”) retroactively revived the provision for 2012 and extended it for the 2013 tax year. The Tax Increase Prevention Act of 2014 extended the provision retroactively for 2014, and the Protecting Americans Against Tax Hikes (PATH) Act of 2015 made the provision permanent.³

A qualified charitable distribution is any distribution:

1. not exceeding $100,000 in the aggregate during the taxable year (the amount is indexed to $108,000 for 2025, up from $104,000 in 2024);


2. made directly, in a trustee-to-charity transfer (including a check from an IRA made payable to a charity and delivered by the IRA owner to the charity);⁴


3. from a traditional or Roth IRA (although distributions from ongoing SEPs and SIMPLE IRAs do not qualify);


4. to a public charity (but not a donor-advised fund or supporting organization);


5. that would otherwise qualify as a deductible charitable contribution (not including the percentage of income limits in IRC Section 170(b) ( Q 739)); and


6. to the extent the distribution would otherwise be includable in gross income.⁵

No charitable income tax deduction is allowed for a qualified charitable distribution.⁶

If a qualified charitable distribution is made from any IRA funded with nondeductible contributions, the distribution is treated as coming first from deductible contributions and earnings.⁷ This is contrary to the general rule that distributions from a traditional IRA with both deductible and nondeductible contributions are deemed made on a pro-rata basis.⁸

Qualified charitable distributions count toward a taxpayer’s required minimum distributions ( Q 3682).⁹

Planning Point: Individuals who own “checkbook IRAs” can make the QCD by writing a check to directly transfer the IRA funds to the charity.  However, the check must be cashed by year-end to count toward that year’s RMD.  It is not enough that the charity merely receives the check.  The funds must leave the IRA to count toward that year’s RMD.

The prohibition on making a qualified charitable distribution from a SEP IRA or a SIMPLE IRA only applies to “ongoing” SEP IRAs or SIMPLE IRAs. These kinds of IRAs are ongoing if a contribution is made for the taxable year of the charitable distribution.¹⁰

Post-SECURE Act, taxpayers who make both post-70½ (deductible) IRA contributions and take qualified charitable distributions (QCDs) are also subject to an anti-abuse rule. Future QCDs are reduced by the total amount of deductible post-70½ IRA contributions that have not offset another QCD, although the amount cannot be reduced below zero.¹¹ Amounts that cannot be treated as a pre-tax QCD can be treated as an itemized deduction for the taxpayer.

Example: An individual who turned age 70½ before 2020 deducts $5,000 for contributions for each of 2020 and 2021 but makes no contribution for 2022. The individual makes no QCDs for 2020 and makes QCDs of $6,000 for 2021 and $6,500 for 2022.

The excludable amount of QCDs for 2021 is the $6,000 of QCDs reduced by the $10,000 aggregate amount of post-age 70½ contributions for 2021 and earlier taxable years. For this individual, these amounts are $5,000 for each of 2020 and 2021, resulting in no excludable QCDs for 2021 (that is, $6,000 – $10,000 = ($4,000)).

The excludable amount of the QCDs for 2022 is the $6,500 of QCDs reduced by the portion of the $10,000 aggregate amount of post-age 70½ contributions deducted that did not reduce the excludable portion of the QCDs for earlier taxable years. Thus, $6,000 of the aggregate amount of post-age 70½ contributions deducted does not apply for 2022 because that amount has reduced the excludable amount of QCDs for 2021. The remaining $4,000 of the aggregate amount of post-age 70½ contributions deducted reduces the excludable amount of any QCDs for subsequent taxable years. Accordingly, the excludable amount of the QCDs for 2022 is $2,500 ($6,500 – $4,000 = $2,500). As described above, because the $4,000 amount reduced the excludable amount of QCDs for 2022, that $4,000 amount does not apply again in later years, and no amount of post-age 70½ contributions remains to reduce the excludable amount of QCDs for later taxable years.¹²