For many of the individuals and families we work with, an Individual Retirement Account (IRA) has been a foundation of long-term savings, growing tax-deferred over years, sometimes decades. At age 73, the IRS requires account holders to begin drawing down a percentage of that balance each year. These Required Minimum Distributions, or RMDs, count as ordinary income, which means they can push your taxable income higher than you might expect or need.
If you are at this point in your planning, you have likely already heard from our team about your 2026 RMD and your options for the year. For those who are also charitably inclined, there is one option that deserves more attention than it typically gets.
The Qualified Charitable Distribution
A Qualified Charitable Distribution, or QCD, allows individuals age 70½ or older to transfer funds directly from an IRA to a qualified charity. The transfer happens pre-tax, meaning the money goes directly to the organization you have chosen without passing through your hands as income first.
For investors who give regularly, this distinction matters quite a bit. A QCD satisfies your RMD for the year, the distributed amount is excluded from your gross income entirely, and you receive the tax benefit regardless of whether you itemize deductions. That last point is particularly relevant now, given the current standard deduction environment. With a typical charitable contribution, someone who takes the standard deduction gets no additional tax benefit from their giving. A QCD sidesteps that limitation completely.
How it fits into the bigger picture
Like any financial strategy, a QCD works best when it is considered alongside your full financial picture. Your assets, income needs, and long-term goals all factor in, and there are specific eligibility rules and nuances to keep in mind before moving forward. It is always a good idea to review the details with your advisor before taking action.
At MA Private Wealth, we think about charitable giving as part of the broader financial plan, not separate from it. When a strategy like a QCD fits, it gives clients a way to support the causes they care about while also being intentional about the tax side of the equation. That is one of the reasons we bring it up proactively when clients are in a position to use it.
If you think this strategy might make sense for you this year, we would welcome the conversation. Reach out to our team anytime.
As always, we welcome your questions about your portfolio or our market outlook. Thank you for your continued trust in our firm.
