In most years, many individuals who are over age 70 ½ must take an annual Required Minimum Distribution (RMD) from their tax-advantaged retirement plans before year-end.

The government established this rule to ensure income taxes get paid from tax-deferred retirement plan contributions, such as IRAs, 401(k)s and 403(b)s. To calculate the RMD, a formula based on life expectancy is applied to your retirement plan balance.

In 2006, to help offset the RMD income tax burden from taxpayers and to encourage charitable giving, Congress introduced Qualified Charitable Distributions (QCDs).

QCDs allow a taxpayer age 73 and up to donate up to $100,000 total to one or more charities directly from a taxable individual retirement account (IRA) instead of taking an RMD. As a result, you may avoid being pushed into a higher income tax bracket and prevent a phaseout of other tax deductions. Starting in 2023, donors can also direct a one-time, $50,000 QCD to a charitable remainder trust or charitable gift annuity as part of recently passed SECURE Act 2.0 legislation

In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan to skip those RMDs. That provision was not extended.

Is a QCD Right for Me?

How can you determine if a QCD is right for your financial planning objectives and charitable giving?

Below are a few things to consider.

If you have to take an RMD but don’t want or need the money, a QCD up to $100,000 can be an effective solution by transferring the minimum required amount out of your IRA directly to charity as a gift or donation. You can avoid paying income tax on the distribution, as is required if you take the distribution directly. A 50 percent excise tax is the penalty for not taking your RMD.

A QCD also can be a good strategy during a year when all or part of your traditional IRA is being converted to a Roth IRA. In the year of the conversion, you still are required to take your RMD for the year, regardless of when the conversion is done during the year. You won’t be able to convert the RMD amount. Without the QCD, you’d have to include the RMD in gross income along with the converted amount.

The alternative is to make a QCD with the RMD amount. That keeps the RMD amount out of your gross income.

Lastly, QCDs can be used to help keep adjusted gross income (AGI) and taxable income within a desired range, as income from a charitable distribution “bypasses” your Form 1040. That is, you will still report the full amount of the 1099 income on your Form 1040 on the line for IRA distributions but will enter “QCD” next to the amount donated, which may net zero as the taxable amount if the full distribution was a QCD.

This can help prevent your income from reaching the thresholds for the net investment income tax and from disqualifying for other tax breaks.

Where Can I Give a QCD?

Although QCDs cannot be gifted to donor-advised funds (DAFs), you can gift QCDs to San Diego Foundation (SDF) strategic initiatives. These collaborative giving opportunities allow you to partner with other donors to make a greater collective impact on the most critical needs facing San Diegans. Choose from the following strategic initiatives:

  • Strategic Initiatives: Advance our vision for just, equitable and resilient communities throughout the region.
  • Children and Families: Provide equitable access to mental, behavioral and physical health and well-being services for children and families.
  • Climate & Environment: Reduce our region’s polluting emissions, protect biodiversity, and minimize local risks from climate change.
  • Education & College Access: Enable more students from underserved communities to prepare for, access and persevere through college.
  • Racial & Social Justice: Support community-led efforts to address systemic racism and increase racial and social equity across San Diego.
  • Workforce Development: Promote access to career training, education, internships, apprenticeships and other upskilling opportunities.

These initiatives are informed by experts in our community and led by an SDF program director that is a leading voice in San Diego on these key issues. We are in direct conversations with grassroots organizations and cross-sector partners, making these funds strategic and targeted to address the greatest needs in our community.

To learn more about these initiatives and how to give a QCD to these help address these needs, contact Amenah Gulamhusein, Senior Director of Strategic Initiatives, at (619) 319-0388 or