^GuidesCharitable Giving FAQs

A QCD is a way for individuals age 70½ or older to give directly from an IRA to a qualified charity without counting that distribution as taxable income. Instead of taking the full Required Minimum Distribution (RMD) into your own name, you can direct some or all of it to a charitable organization, allowing you to support causes you care about while also managing how much taxable income shows up on your return.

Once you turn 73 and have a traditional IRA, SEP IRA, or SIMPLE IRA, you’re generally required to take RMDs each year, and those withdrawals are taxed as ordinary income. A QCD allows part or all of that required amount to be sent directly from your IRA custodian to an eligible charity. When done correctly, the QCD can count toward your RMD but is excluded from your taxable income, which may help prevent your income from being pushed into a higher tax bracket.

QCDs are made from IRAs. They can come from traditional IRAs and, in some cases, from SEP or SIMPLE IRAs—as long as those SEP or SIMPLE IRAs are “inactive,” meaning no contributions are being made to them in the year of the QCD. Other retirement plans, such as 401(k)s and similar non-IRA accounts, don’t qualify directly for QCDs.

Yes. There is an annual cap on the amount that can qualify as a QCD in a given year, and that limit is adjusted periodically for inflation. To be eligible, the individual must be age 70½ or older and make the distribution directly from an eligible IRA to a qualified charity. The maximum amount that can qualify as a QCD increased from $108,000 in 2025 to $111,000 in 2026. A QCD can satisfy all or part of a Required Minimum Distribution (RMD), but any amount exceeding the year's RMD cannot be carried forward to satisfy an RMD in a future year.

Because QCDs are excluded from taxable income, they can help lower your Adjusted Gross Income (AGI), which can have a positive ripple effect across other parts of your tax picture. In many cases, you don’t need to itemize deductions to benefit; instead, the QCD simply never shows up as income in the first place. That said, tax rules vary by state, and QCDs must be executed properly—directly from the IRA to a qualifying charity—so it’s important to coordinate with your tax, legal, and accounting professionals.

QCDs may be worth considering if you want to satisfy some or all of your RMD while supporting a qualified charity, reduce the amount of IRA distributions included in your taxable income, or make larger charitable gifts without relying solely on current cash flow. Many retirees use QCDs to match their giving goals with their required distributions in a more intentional way.

A charitable remainder trust is an irrevocable trust that lets you pursue your philanthropic goals while also creating a potential income stream for yourself or other beneficiaries. The trust pays income first, for either a set term of years (up to 20) or for one or more lifetimes, and then, at the end of that period, the remaining assets go to one or more charities you’ve chosen.

A CRT is a “split interest” vehicle: part of the benefit is for people (you or other beneficiaries), and part is for charity. When you contribute cash or property to the CRT, you make an irrevocable transfer and may qualify for a partial income tax deduction based on the projected value that will ultimately pass to charitable beneficiaries. During the trust term, the CRT distributes income or principal to the income beneficiaries. When the term ends or the last income beneficiary passes away, the remaining assets in the trust are distributed to your designated charitable organizations.

There are two primary types of CRTs:

Charitable Remainder Annuity Trust (CRAT): Pays a fixed annuity amount each year, based on the initial value of the trust. Additional contributions to the trust are not allowed.

Charitable Remainder Unitrust (CRUT): Pays a fixed percentage of the trust’s value, re-calculated annually. Additional contributions are generally permitted.

For both CRATs and CRUTs, IRS rules generally require the payout rate to be at least 5% and no more than 50%. Payments may be made annually, semi-annually, quarterly, or monthly, depending on the trust's terms.

You can fund a CRT with a variety of assets, including cash, publicly traded securities, certain types of closely held stock (with some restrictions, such as limitations on S-corp stock), real estate, and other complex assets. This can be especially useful if you hold low-basis, highly appreciated, or non-income-producing property and want to reposition it without immediately recognizing the full capital gain that might otherwise result from a sale.

A CRT can help preserve the value of long-term appreciated assets because the trust generally can sell those assets without immediately recognizing capital gains tax at the trust level, allowing more of the proceeds to remain invested for the benefit of both income and charitable beneficiaries. You may also be eligible for a partial income tax charitable deduction when you fund the trust, based on the actuarially determined value expected to pass to charity. In addition, a CRT is generally exempt from income tax at the trust level, which can make it an effective tool for diversification and investment management. Distributions to beneficiaries are generally taxable under the CRT's distribution rules, but the overall structure can help balance current income needs with long-term charitable goals.

Yes. One strategy is to name the public charity that sponsors your donor-advised fund as the remainder beneficiary of the CRT. When the trust term ends, the remaining assets pass to the sponsoring charity and may be credited to the donor-advised fund, allowing ongoing grant recommendations to eligible charities in accordance with the sponsoring organization's policies. This approach can offer greater flexibility than naming a single charity directly and may be simpler than changing the charitable beneficiaries of the trust over time. 

A CRT may be worth exploring if you want an immediate charitable deduction, have a need for an income stream for yourself or a loved one, and also want the remainder to ultimately support charities you care about. It can also be established through your will to provide for heirs first, with the remaining assets going to charity. Because CRTs are complex and irrevocable, they should be considered in the context of your broader financial, estate, and tax picture.