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A Qualified Charitable Distribution (QCD) is an allowed distribution from an IRA to a non-profit organization. First introduced as part of the Pension Protection Act of 2006, these distributions remain an option for donors today. While QCDs were available last year, the CARES Act allowed all subject to skip Required Minimum Distributions (RMDs) for 2020, rendering QCDs somewhat (and temporarily) less appealing for donors. This article describes key QCD limitations and includes scenarios when a QCD might make sense for donors in 2021.

QCD Eligibility

  • Generally taxpayers must be subject to a Required Minimum Distribution (RMD). Although Congress extended the age at which investors are subject to RMDs from 70 ½ to 72 as part of 2019’s SECURE Act, investors over the age of 70 ½ (the prior RMD starting age) remain eligible to make QCDs.
  • Distributions may satisfy all or part of an investor’s RMD, subject to the dollar limits below. QCDs are not also deductible as charitable gifts because they work similarly to deductions in that they allow taxpayers to avoid recognizing taxable income from an RMD.
  • QCDs are limited to $100,000 per individual taxpayer or $200,000 for married couples filing jointly.
  • Donor advised funds, supporting organizations, and private foundations are ineligible as QCD recipients. Distributions must be made directly from an IRA to a 501(c)(3) public charity.
  • Roth IRAs are not subject to RMDs and are thus excluded from QCD eligibility.

Scenarios When a QCD Might Make Sense Again in 2021

  • An investor who is between 70 ½ and age 72 with desire to make near-term major gifts. This range presents an odd gap in the SECURES Act provision in that while these investors are not subject to RMDs they may still make QCDs. This option might make sense for investors who otherwise expect to take the standard deduction but who also would like to make a major gift this year. Examples include fulfilling multi-year charitable pledges early, funding Covid-related relief efforts, and participating in matching gift campaigns.
  • Investors over age 72 – subject to RMDs again in 2021 – with significant charitable intent and a relatively low taxable assets / IRA assets ratio. Many investors accumulate substantial wealth in their retirement accounts over their working years but have comparatively little in taxable assets. An investor in this situation might not be able to itemize gifts of after-tax money, but could still make a large QCD.
  • Tax-sensitive investors – The QCD can be deducted from an investor’s required minimum distribution, providing a reduction in their adjusted gross income and income taxes.


Qualified Charitable Distributions are an important tool for donors with large IRA values and major & on-going (e.g., annual) charitable gifting plans. However, QCDs might make sense in other scenarios, after taking into account the amount of the RMD relative to QCD limits, near-term charitable gifting plans, and whether itemizing gifts of after-tax assets is likely. We urge to you ask your tax attorney or CPA for more specific recommendations.


Past performance is no guarantee of future results.  Investing involves risk, including possible loss of principal.  Diversification may not protect against market risk or loss of principal.  The opinions expressed above should be construed as neither investment advice nor a solicitation to buy or sell securities.  Actual investor results may vary.

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