Back when I was a young CPA preparing tax returns, I met a man with an interesting problem. He had recently turned 71 and was still working, but he was also receiving a pension, Social Security and a required distribution from his Individual Retirement Account (IRA).  At that time, required minimum distributions began at age 70½. As he rather colorfully put it: “I have more damned money than I know what to do with, and now the government is forcing me to take even more!”

After a lifetime of saving, he had income from four sources. His wife had died several years earlier, his mortgage was paid off, and he had little interest in travel or expensive hobbies. He simply enjoyed working and puttering around his home. Qualified charitable distributions, or QCDs, were not available to him at the time. Had they been, I believe he would have loved them. In my opinion, QCDs are one of the best charitable-planning provisions Congress has enacted in recent history.

A QCD allows an IRA owner who is at least age 70½ to direct money from an IRA to an eligible charitable organization. When handled properly, the distribution is excluded from taxable income and can count toward the donor’s required minimum distribution.

Congress first authorized QCDs as a temporary provision in the Pension Protection Act of 2006. After several extensions, they became a permanent part of the tax law in 2015. Despite having been available for nearly 20 years, QCDs remain surprisingly underused.

Why Are QCDs So Often Overlooked?

1. People confuse the QCD age with the RMD age

QCDs are available beginning at age 70½, but most taxpayers do not begin required minimum distributions (RMD) until age 73. Because QCDs are usually discussed in connection with RMDs, many people do not hear about them during that 2½-year window. They may continue writing checks to charity without realizing that giving directly from an IRA could be more tax efficient.

2. Writing a check is easier and more familiar

Many longtime donors give by check or credit card simply because that is what they have always done. However, taking a taxable IRA distribution and then writing a personal check to charity is not the same as making a QCD. To qualify, the distribution must generally go directly from the IRA to an eligible charitable organization. That extra step can make the process seem more complicated than it really is.

3. The tax benefit is not intuitive

A QCD does not create an additional charitable deduction. Instead, it keeps the qualifying IRA distribution out of taxable income. Some donors hear, “You cannot deduct it,” and assume there is no benefit. But excluding the distribution from adjusted gross income may be more valuable than claiming an itemized deduction.

Depending on the donor’s circumstances, a QCD may help reduce the taxation of Social Security benefits, limit exposure to Medicare income-related premium surcharges and lessen the effect of other income-based tax provisions. It can be especially valuable for someone who claims the standard deduction and would receive little or no additional tax benefit from writing a personal check.

4. No one necessarily owns the conversation

The financial advisor knows about the client’s IRA. The CPA sees the client’s tax return. The charity knows about the donor’s giving history. The IRA custodian processes the transaction. Unless someone connects those pieces, the donor may never hear about the opportunity.

The CPA may not learn about the client’s charitable gifts until after year-end, when it is too late to change how those gifts were structured. The charity may know a donor’s age but not whether the donor owns a substantial IRA. The financial advisor may know about the IRA but not the extent of the client’s charitable giving. QCD planning works best when these conversations occur before the gifts are made.

5. The rules and paperwork can be intimidating

QCDs are fairly straightforward once a process is in place, but there are rules. They generally cannot be made directly from a 401(k) or directed to a donor-advised fund. The money must go to an eligible charitable organization, and the donor should obtain proper written acknowledgment from the charity.

Historically, QCDs have also been difficult to identify on tax documents. Form 1099-R has generally reported the total IRA distribution without clearly separating the QCD portion. The taxpayer must therefore make sure the tax preparer knows how much was given through QCDs. Without good records, the transaction can be overlooked or reported incorrectly. That is why we track QCD activity for our clients throughout the year and include it in our reporting. We do not want clients or their tax preparers trying to reconstruct the transactions months later.

Nonprofits May Be Missing an Opportunity

Many charitable organizations mention QCDs only on a planned-giving page buried deep within their websites. Fundraising professionals may not be trained to identify potential QCD donors, explain the basic process or provide the information needed to complete a transfer. Some organizations may also hesitate to discuss QCDs because they do not want to appear to be giving tax advice.

But nonprofits do not need to provide individualized tax advice. They can simply educate supporters about the availability of QCDs, explain the basic requirements and provide clear instructions for making a gift. That alone could uncover a significant source of charitable support.

Making the Process Easier

For someone coordinating a QCD alone, the process can be a little tricky. The donor must work with the IRA custodian, provide accurate information about the charity and maintain appropriate documentation.

For clients of Arkansas Financial Group, Inc., we try to make it easy. Clients can tell us how much they want to donate and provide the name and address of the eligible charitable organization. We can then help prepare the paperwork and coordinate the distribution from the IRA.

QCDs are underused not because they are ineffective, but because they fall into the gaps between charitable giving, retirement planning, tax preparation and nonprofit fundraising. Even if you have not yet reached age 70½, you may know someone facing the same situation as the gentleman I met many years ago: more taxable retirement income than is needed and a genuine desire to help others. You may also be involved with a nonprofit organization that could benefit from educating its supporters about QCDs.

We love seeing our clients use QCDs to support the organizations and causes that matter to them. It is a true win-win: the donor may receive a meaningful tax benefit, and the charitable organization receives much-needed support.

Kristina Bolhouse, CPA/PFS, CFP®

President

© 2026 Kristina Bolhouse and The Arkansas Financial Group, Inc., All rights reserved.

References, Resources & Citation

https://www.fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html

The Arkansas Financial Group, Inc. is a Fee-Only Financial Planning Firm located in Little Rock, AR serving clients in Arkansas and throughout the country.

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