What Are You Really Leaving Behind?

Qualified Charitable Distributions: Turning Retirement Savings Into Kingdom Generosity

Katie Brubaker: Welcome back to the Smarter Generosity podcast. I’m Katie Brubaker.

Eric Fleshood: And I’m Eric Fleshood.

Katie: Today, we’re excited to share a conversation that Eric and I have been having over the last couple of weeks.

In fact, we’re so excited about this topic that we changed our plans for this episode at the last minute because we wanted to bring the conversation to you.

We’re going to talk about qualified charitable distributions, or QCDs, and the significant opportunities they’re creating for kingdom generosity.

Eric, let’s start at the beginning.

If you have an IRA or retirement account, or if you know somebody who does, this is a topic worth paying attention to.

What exactly is a qualified charitable distribution, and how does it relate to an IRA?

Eric: For many people, their individual retirement account, or IRA, will be one of the largest financial assets they accumulate during their lifetime.

A qualified charitable distribution is a way to give directly from an eligible IRA to a qualified charitable organization.

The key is that the distribution goes directly from the IRA custodian to the charity.

The money doesn’t first come into your personal bank account. It’s transferred directly for charitable purposes.

And that creates some significant opportunities for people who want to be generous with the resources God has entrusted to them.

Katie: That’s an important distinction.

We’re primarily talking about traditional IRAs because that’s where the tax benefits of QCDs can be particularly meaningful.

Normally, when someone takes money out of a traditional IRA, that distribution is generally included in their taxable income. They can then choose to make a charitable contribution, potentially qualifying for a deduction.

But with a QCD, the eligible distribution goes directly from the IRA to the charity.

That changes the tax treatment.

Eric: That’s right.

And one of the important eligibility requirements is age.

You must be at least 70½ years old when the distribution is made.

QCDs can be especially helpful for people who are also subject to required minimum distributions, or RMDs.

For many retirees, required minimum distributions begin at age 73, although the starting age depends on when you were born.

Traditional IRAs are designed to provide tax advantages during your working years. In many cases, you’ve deferred paying income taxes on those contributions and their earnings.

Eventually, when you begin taking withdrawals, those distributions are generally taxable.

But a qualified charitable distribution provides an opportunity to direct eligible IRA funds to charity without including the qualifying amount in your taxable income.

For people who are already charitably minded, that can be a very effective way to continue supporting their churches, ministries, and other charitable organizations during retirement.

Katie: Those required minimum distributions are particularly interesting.

I’ve talked with people who hear about QCDs and say, “This sounds too good to be true. Are you sure it’s legal?”

And yes, absolutely, it is.

Eric: It is.

Congress established this provision to encourage charitable giving from retirement accounts.

And I think what’s remarkable is the amount of potential generosity represented by IRA assets across the United States.

We’re talking about trillions of dollars held in individual retirement accounts.

A significant portion of those resources belongs to people who are already at or approaching retirement age.

When I think about that and then think about the fulfillment of the Great Commission, I see an extraordinary opportunity.

For those who are 70½ and older, this is a particularly meaningful way to participate financially in advancing the gospel.

Katie: You’re talking about the possibility of an entire generation using retirement resources to make a significant difference in fulfilling the Great Commission.

Eric: Absolutely.

Think about the plans that mission organizations and ministries around the world have developed.

Our friend Jim Wise has done work examining the resources that could be needed to support the existing plans of Christian ministries.

When you begin comparing those needs with the enormous amount of wealth held in retirement accounts, the possibilities are remarkable.

It’s difficult to comprehend the scale of those resources.

And I think it should encourage us to consider how the Lord might use the generosity of people in this season of life.

Katie: Let’s talk about the practical details.

Suppose someone is listening and says, “This sounds wonderful. I want to do it.”

Are there limits?

Could they give everything in their traditional IRA through a qualified charitable distribution?

What are the rules?

Eric: There is an annual limit on the amount that can qualify for QCD treatment.

For 2026, that limit is $111,000 per eligible individual.

Congress has also provided for that limit to be adjusted for inflation.

For a married couple where both spouses are eligible and each has an IRA, that could mean a combined total of $222,000 in qualified charitable distributions during 2026.

But it’s important to understand that the limit applies to the individual taxpayer, not separately to each IRA account.

So if you have multiple IRAs, you don’t receive a new $111,000 limit for each account.

The annual limit applies to your total qualifying distributions.

Katie: That’s helpful.

So a married couple could potentially give up to $222,000 through QCDs if they’re both eligible.

And those qualifying distributions aren’t included in their taxable income?

Eric: That’s right, assuming the distributions satisfy the applicable requirements.

But there’s another important distinction.

A qualified charitable distribution doesn’t also generate a charitable income tax deduction.

People sometimes find that confusing.

They ask, “If I don’t receive a deduction, what’s the tax benefit?”

The benefit comes from the exclusion of the qualifying distribution from taxable income.

The money goes directly from the IRA to charity, and the eligible amount isn’t included in your taxable income.

You don’t receive an additional charitable deduction for that same amount.

And this is something eligible individuals can do year after year.

Another important benefit is that a QCD can satisfy some or all of your required minimum distribution for the year.

Katie: Explain that a little more.

How does a QCD work with a required minimum distribution?

Eric: The timing matters.

Let’s say you’re required to take a distribution from your IRA this year.

In January, you take a normal taxable withdrawal. Later in the year, you decide you’d like to make a qualified charitable distribution.

The withdrawal you took in January is generally counted toward satisfying your RMD first.

You can’t retroactively change that taxable withdrawal into a QCD.

So if your intention is to satisfy some or all of your RMD through charitable giving, it’s helpful to plan for that before taking your normal distributions.

Katie: So if I want my QCD to count toward my required minimum distribution, I should be thinking about it early in the year rather than waiting until December and discovering I’ve already satisfied my RMD.

Eric: Exactly.

Some people don’t need all the income they’re required to withdraw from their IRA.

They may decide to give an amount equal to their required minimum distribution directly to charity through a QCD.

Others may need some of that money for living expenses but want to give the remainder.

There are different ways to approach it depending on your circumstances.

What’s important is understanding how the distributions work together and planning accordingly.

Interestingly, at Cru, we see a lot of QCD activity in the fourth quarter.

People begin thinking about the approaching end of the tax year, reviewing their finances, and making decisions about year-end giving.

And we’ve seen tremendous growth in the number of people using qualified charitable distributions.

Once people understand the opportunity, many become very interested in exploring it.

Katie: And I think there’s another benefit we should talk about.

Eric: There is.

For some people, an increase in taxable income can have consequences beyond the income tax itself.

It may affect their tax bracket or other income-related calculations.

For example, Medicare premiums can be affected by an individual’s income.

So when an eligible charitable distribution is excluded from income, that may help reduce some of those additional costs.

It’s another reason people find QCDs valuable as part of their retirement giving plans.

Katie: Absolutely.

And I think part of the reason we’re seeing more QCDs come into Cru is that people are beginning to understand how flexible they can be when supporting different ministries.

A qualified charitable distribution doesn’t necessarily have to support only one charitable organization.

The process begins by contacting the financial institution that holds your IRA, sometimes called your IRA custodian.

You tell them you want to make a qualified charitable distribution and provide the information for the eligible charity or charities you’d like to support.

Within Cru, people may choose to support particular ministries, projects, or missionaries and staff members through eligible charitable gifts.

We’ve seen QCDs being used in those different ways.

And I think as more people discover this opportunity, we’re beginning to see it spread throughout the ministry.

They’re realizing that their traditional IRAs can become a significant source of generosity during retirement.

Eric: That’s right.

My wife and I are 55, so we’re still a little ways away from being eligible.

But we’re already thinking about how we might use our traditional IRAs for charitable giving once we reach that age.

It’s one of the considerations we have as we think through our retirement savings and the differences between traditional and Roth IRA contributions.

And there’s another aspect of this that’s been especially encouraging to see.

It’s the effect qualified charitable distributions can have on missionaries who rely on financial support from ministry partners.

Think about someone who’s been faithfully supporting a missionary for years.

They enter retirement and realize their income is going to change.

Maybe they’re no longer receiving the salary they earned during their working years, and they’re beginning to think about living on a fixed income.

They may start wondering whether they’ll have to reduce the support they’ve been giving.

And unfortunately, sometimes that means considering cuts to their missionary support.

But when those donors learn about QCDs, they may discover another way to continue their generosity.

They realize that the retirement account they’ve been building for years can also be used to support the ministries they care about.

We’ve heard encouraging stories from our missionary staff about donors who have been able to maintain or even increase their support after learning about this option.

It’s wonderful to see.

Katie: I think generous people are also helping educate other generous people.

These conversations are taking place among families, friends, and people who share a commitment to ministry.

When I first learned about QCDs, I immediately called my parents.

I asked my dad, “Do you give this way?”

And he said, “Absolutely, we do.”

I had no idea!

We’d never had that conversation before.

So I think word is spreading as people begin talking with one another about the different ways they can give.

Now, Eric, I want to return to something you mentioned earlier.

You were talking about how you and your wife are thinking about retirement and potentially using your traditional IRAs for giving in the future.

That makes me think about another important question.

What happens if I inherit my parents’ traditional IRA?

I know there are certain assets that can be more advantageous to inherit than others.

Where does a traditional IRA fit into that picture?

Eric: That’s a very important question.

A lot of families recognize that federal estate taxes may not apply to them because of the relatively high estate tax exemption.

But that doesn’t mean there aren’t other tax considerations when passing assets to the next generation.

One of those considerations involves something called income in respect of a decedent.

It’s a tax concept that can apply when someone inherits a traditional IRA.

Remember, traditional IRA assets often represent income on which taxes have been deferred.

When the original owner withdraws those funds, the taxable portion is generally subject to income tax.

And when a traditional IRA is inherited, the beneficiaries may also owe income tax as they take distributions.

For families who haven’t considered this, it can come as a surprise.

An IRA may represent a substantial portion of someone’s estate, but leaving that IRA to children or other beneficiaries can create income tax obligations for those heirs.

That’s why we’re seeing more families ask whether their traditional IRA is necessarily the best asset to leave to their children.

Depending on their circumstances, they may have other assets that would be more tax-efficient to pass along.

And they may find that leaving some or all of their traditional IRA to charity is a better fit with their charitable and estate planning goals.

Because qualifying charitable organizations generally don’t pay income tax on the IRA assets they receive, that can create meaningful opportunities for tax-efficient generosity.

Katie: That’s a really important consideration.

Eric, believe it or not, we’re already getting close to the end of our time.

But before we wrap up, is there anything important about qualified charitable distributions that we haven’t covered?

Eric: Yes. There’s one significant limitation we haven’t discussed.

For people who are familiar with donor-advised funds, it’s important to know that a standard qualified charitable distribution cannot be contributed to a donor-advised fund.

Congress has established restrictions on which charitable recipients qualify for QCD treatment.

Donor-advised funds are excluded.

So if you’re using a QCD, you need to make sure the organization receiving the distribution is eligible.

But even with that limitation, there are tremendous opportunities.

You may be able to use QCDs to support your church, eligible ministries, and other qualified charitable organizations.

That’s why I think they can play such an important role in the giving strategies of people who are in retirement.

Katie: And even though I said we were wrapping up, I thought of one more question.

Let’s say someone is listening and says, “Eric, I understand the $111,000 limit, but I want to give more than that this year.”

Can they give more from their IRA?

And what happens from a tax standpoint if they go beyond that limit?

Eric: I’m glad you asked because I wouldn’t want people to leave with the impression that $111,000 is the most they can give from an IRA in a year.

That’s not what the limit means.

It’s the annual limit for the special QCD tax treatment in 2026.

People can make charitable gifts using IRA funds outside that limit, but the tax consequences are different.

And you don’t necessarily have to be 70½ to withdraw funds from an IRA and give them to charity.

For someone who isn’t eligible for QCD treatment, one option may be to take a normal distribution from their IRA and then make a charitable contribution.

That distribution may be taxable, and the charitable contribution may qualify for a deduction, depending on the applicable rules and their individual tax circumstances.

Katie: And generally speaking, once someone reaches age 59½, they can take IRA withdrawals without the usual early withdrawal penalty, correct?

Eric: That’s right.

That age is an important threshold under the normal IRA distribution rules.

And it creates additional possibilities for people who want to use retirement resources for charitable giving.

But the tax treatment is different from a QCD.

The $111,000 limit isn’t a ceiling on how much someone can give from an IRA.

It’s a ceiling on how much can receive the special annual QCD exclusion in 2026.

Katie: So if I wanted to give more than $111,000 from my IRA during the year, what would happen to the additional amount?

Eric: The portion above the QCD limit would generally be treated as a normal IRA distribution.

That means the taxable portion would be included in your income.

You could then make a separate charitable contribution using those funds.

Depending on your circumstances, that contribution might qualify for a charitable income tax deduction.

But it’s important to understand that receiving a deduction isn’t automatic, and it may not offset the tax on the distribution dollar for dollar.

That’s something you’d want to review with your professional tax advisor.

Katie: And could someone use that additional amount to contribute to a donor-advised fund?

Eric: Potentially, yes.

Because that additional distribution would not be treated as a QCD, the person could consider contributing the proceeds to a donor-advised fund.

The charitable deduction rules would still apply, of course.

But the restriction against directing QCDs into donor-advised funds wouldn’t apply in the same way because it would be a separate charitable contribution.

Katie: I think the flexibility is one of the reasons we’re seeing so much interest in charitable giving from IRAs.

It’s a conversation we’re having more frequently at Cru Foundation, and I know it’s happening among generous families across the country.

People are beginning to see that the resources they’ve accumulated for retirement may also create opportunities for kingdom impact.

And that’s why we wanted to talk about it today.

Eric, you usually get the last word, so I’ll give you the opportunity to close us out.

What’s the one thing you’d want our listeners to take away from this conversation?

Eric: I’d really like to commend and encourage those who are listening who are 70½ and older.

I’ve been so impressed by the faithfulness and commitment of this generation to the fulfillment of the Great Commission.

Many of these believers have spent their entire lives supporting the mission that Bill Bright gave himself to, helping see the name of Jesus proclaimed among the nations.

And now they’re entering a season of life where an additional charitable giving opportunity is available to them.

I find that remarkable.

Tom Brokaw famously used the phrase The Greatest Generation to describe those who lived through the Great Depression and World War II.

When I look at the commitment and steadfastness of so many older believers today, I see something similarly remarkable in their dedication to kingdom purposes.

I’m grateful for them.

And I’m excited about what God may continue to accomplish through their generosity.

Katie: I love that. I think that’s a wonderful place to end.

Thank you, Eric, for having this conversation with me and helping us share some of the opportunities we’re seeing for kingdom impact through traditional IRAs.

Eric: It’s been my pleasure, Katie. Great talking with you. See you next time.

Katie: You too, Eric. We’ll see you next time.

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This transcript has been edited for clarity and readability. Verbal fillers, repeated phrases, and recording interruptions have been removed.

This content is provided for educational purposes only and should not be considered legal or tax advice. Please consult your professional advisor regarding your specific situation.