^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 making the distribution from a qualified account, with the annual limit increasing from $108,000 in 2025 to $111,000 for 2026. You can give more than your RMD, but any amount above your RMD cannot be carried forward to satisfy future RMDs.

Because QCDs are excluded from taxable income, they may 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 make sense if you want your RMD to benefit a charitable organization rather than increasing your taxable income, if you prefer to support approved charities instead of private foundations, or if you’d like to make a larger charitable gift than you’re comfortable making from regular 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.

In both cases, IRS rules require the annual payout to be at least 5% but no more than 50% of the trust’s assets, and payments can be scheduled annually, semi-annually, quarterly, or monthly.

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 triggering a large immediate tax bill.

A CRT can help preserve the value of long-term appreciated assets, because when the trust sells those assets, it generally does so without paying immediate capital gains taxes—allowing more value to remain for both income and charitable beneficiaries. You may also be eligible for a partial income tax charitable deduction at the time you fund the trust. In addition, investment income inside the CRT is generally exempt from tax at the trust level, which makes it a potential tool for diversification. Income paid out to beneficiaries is taxable to them, but the overall structure can create a balance between current income needs and long-term charitable impact.

Yes. One strategy is to name a public charity that sponsors a donor-advised fund as the remainder beneficiary of the CRT. When the trust term ends, the remaining assets flow into the donor-advised fund, and from there you (or your successors) can recommend grants to a wide range of charities. This approach can provide more flexibility than naming a single charity directly, and it can be less costly and complicated than amending the charitable beneficiary of the trust itself.

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 to ensure that the remainder ultimately supports 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.