QCDs from IRAs, but PDQ
- 5 days ago
- 3 min read
By
Thomas R. Kestler, CFP, CLU, ChFC, CMFC
The financial world loves its acronyms—sometimes it feels like learning a new language! Let’s break down a few important ones:
QCD stands for Qualified Charitable Distribution — a special way to donate to charity directly from your retirement account.
IRA stands for Individual Retirement Account, a common type of retirement savings plan.
RMD means Required Minimum Distribution, which is the amount the IRS requires you to withdraw from certain retirement accounts once you reach a certain age (currently 73).
PDQ simply means Pretty Darn Quick—a playful reminder to act early!
Now that we’ve cleared that up, let’s talk about how QCDs can make a big difference for the right person.
Under current tax law, individuals aged 70½ or older who own an IRA can make a direct transfer from their IRA to a qualified charity. The key is that the money must go directly from the IRA to the charity—if you withdraw it first and then donate it, it doesn’t count as a QCD.
Here’s why this is a big deal: Normally, IRA withdrawals are taxed as income. But with a QCD, the transfer is not counted as taxable income for that year. That can help keep your taxable income lower, which might reduce your overall tax bill or even help prevent your Social Security benefits from being taxed.
A few important details:
QCDs only apply to IRAs, not 401(k)s or other employer retirement plans. If you have a 401(k), you’d need to roll those funds into an IRA before using the QCD strategy.
There’s an annual cap of $108,000 per person in 2025 for QCDs.
Even though the age for RMDs (Required Minimum Distributions) is now 73, you can start making QCDs at age 70½.
Let’s look at an example:
David, age 75, has to take a $10,000 RMD from his IRA each year. He doesn’t need that money for living expenses, and he gives to his church regularly. Normally, his $10,000 withdrawal would be fully taxable, costing him $2,500 in taxes if he’s in a 25% tax bracket.
If David uses a QCD to send that $10,000 directly from his IRA to his church, he:
Meets his RMD requirement
Gives $10,000 to charity
Pays $0 in taxes on that amount
In both cases, the church gets $10,000, but with a QCD, David keeps an extra $2,500 in his pocket.
Tip: The IRS counts the first money you withdraw from your IRA each year toward your RMD. So, if you want your QCD to count, make it early—PDQ (Pretty Darn Quick)—before taking any other distributions.
For charitably-minded retirees, QCDs can be a powerful way to give back, reduce taxes, and make the most of your retirement income—all while supporting the causes you care about most.
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Tom Kestler has been involved in the financial planning field for over 45 years. He is a graduate of Millersville State University and the College for Financial Planning in Denver, Colorado (for which he has acted as an adjunct instructor) and carries the Certified Financial Planner (CFP) designation.
He has also been awarded the Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Chartered Mutual Fund Counselor (CMFC) designations from the American College in Bryn Mawr, PA. He was the founder of Kestler Financial Group, Inc., a firm which specialized in the marketing of financial products and services to over 5,000 independent representatives throughout the United States. Kestler Financial Group was acquired by Highland Capital in 2018.
Mr. Kestler carries Life, Health and Variable Products licenses in several states and provides consulting services to insurance companies on product design and development. He also acts as an expert witness in securities and insurance litigation cases.
Prior to his retirement, Tom served as VP Advanced Sales at Highland Capital, and also CEO of Branch Development Partners, an Office of Supervisory Jurisdiction (OSJ) for Securities America, Inc. (now Osaic), an independent securities broker/dealer.
Tom will be teaching an upcoming Financial Wellness Course— the first class will be held on Monday, December 8th.
In the meantime, if you have a question for Tom, please post it in the Comments box below.
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