Thoughts on QCDs (Qualified Charitable Distributions)

By Alan Silverstein, Fort Collins, Colorado. Email me at ajs@frii.com.
Last update: August 12, 2026

Upon turning 70.5 I suddenly found traditional IRA QCDs (Qualified Charitable Distributions) much more interesting (grin). (See also my Financial Age Milestones webpage.) I studied some about how they work, talked with a friend about what I learned, and decided to capture some of that in this essay.

The main purpose of a QCD appears to be encouraging charitable giving by making it more attractive, that is, all tax-free (without having to itemize, if you even qualify), including for many states with income taxes (and that's certainly possible for me in Colorado). Also as "above the line" reductions, QCDs lower your AGI, which is important if you're faced with AGI-based "effective tax brackets" like SS taxability or IRMAA. The "tax optimization" benefits of QCDs, especially once you reach RMD (required minimum distribution) age are big enough to be worth the hassle for most eligible people.

The main properties of QCDs appear to be:

• Available to people at least age 70.5 (nowadays lower than RMD ages) with non-zero traditional IRA (tIRA) balances; up to $111k/year/person in 2026. Can be made to most qualified charities, but not to a Donor-Advised Fund (DAF) or private foundation. Also unlike quid pro quo rules (partial credit) for non-QCD donations, if you receive any benefit from a QCD, such as lottery tickets or a small gift, the entire donation is disqualified.

• If you need or want your entire RMD (or more) in your pocket (in any one year) regardless of making any donations, using QCDs for the donations is usually still tax-advantageous, but the order of distributions basically doesn't matter -- despite common advice to the contrary. You owe ordinary income tax on any tIRA money you distribute to yourself over the course of the tax year (unless you have a post-tax basis, see below), and if you withdraw to yourself your entire RMD (or more), it's all taxable regardless of additional QCDs.

• If you don't need or want your entire RMD (in any one year), but you do want to make any qualified charitable donations, then taking (all of your) QCDs before distributing your entire RMD means you satisfy your RMD, but don't owe tax on the QCD portion. (Note: If you happen to take multiple tIRA distributions, like monthly, it's not required that QCDs come first, just soon enough.) Either way, the IRS "first dollars out" rule for RMDs applies, but some of those dollars can be QCDs to reduce the RMD taxable amount.

  In short, depending on the size of your donations vs RMD, the QCD can reduce or zero out all of your taxes due on the RMD -- if you take the QCD dollars "soon enough" and don't need the entire RMD amount in your hands.

• QCD money still shows up on a 1099-R as an ordinary distribution; custodians are not yet (as of 2026) required to add code Y to the event. It's up to the taxpayer to reduce Form 1040 line 4b (IRA distributions, taxable amount) below 4a (gross distrib) and mark it as a "QCD" -- starting in 2025, using a checkbox on line 4c. The custodian can't report this on the 1099-R, which is strange because they do want you to tell them it was a QCD -- Fidelity at least has a different webpage sequence for this kind of transaction -- and I was told they remember and can report this QCD indication to you later. (See below for more about Fidelity QCDs in particular.)

  At least through Fidelity, the QCD amount itself can be sent to you (for forwarding) as a check made out to the charity, or directly to another entity. But the custodian has no way to know if you donated it to an appropriate charity as you should, hence the 1099-R weirdness above. They know your intentions, but don't vouch for them nor report them.

  Note: 1099-Rs are "timeless" beyond the tax year, so just receiving those, the IRS doesn't know if you obeyed the ordering rules described earlier. But they are explicit and should be followed in case you get audited.

• TurboTax, at least, knows to ask if any of the distribution was a QCD, and handles it correctly... So you don't have to override line 4b manually. (But be sure to find a way to mark it as a QCD if the option is buried under "?" or something!)

• One more wrinkle is that if you have non-deductible basis in your tIRA (I still have a tiny bit), you must prorate it out annually, you can't eat it up all at once, and the QCD amount is taken purely from pre-tax dollars before you apply the proration. Line 4c will simply say "QCD", but I guess the backing forms must spell out the details. (Since I must look up the Dec 31 total value of my tIRA, actually all of them if I had multiple, and report it to TurboTax for the proration, I'm guessing it'll reduce it by QCD first.)

• And yet one other wrinkle is that Fidelity, at least, has this deep but somewhat opaque model of "core accounts", including inside tIRAs. QCDs (and really any other distribution or conversion) must come from there, meaning if there's not enough cash in that fund, you must trade/sell something into it first (and wait for that transaction to clear). (But apparently using the QCD form mentioned below, you can instruct them to sell-before-transfer?)

  Oddly, they're willing to set up automatic periodic QCD payments -- meaning you risk an "insufficient funds" notice out of the blue if you don't pay attention -- no thanks. I want them to save my list of over 20 charities for annual or sporadic reuse without re-entering address info, but never do auto-pay. (See next part below.)

• If all that wasn't enough, perhaps also pay attention to special state donation deductions or credits for QCDs, such as Colorado Form DR1317 for the Child Care Tax Credit...

Some practical considerations; an experiment in July 2026: I made a special disaster donation as my first QCD, through the Fidelity website, to see what happened. They told me earlier to expect that after entering the charity name and address, which was laborious, that there will be a way to save it "for next time", similar to how Web Bill Pay works at my credit union, where I can add, modify, delete, list, and reuse "payees". But I never saw any such options, and when I pretended to make another donation to the same charity, it didn't offer up the previous address as a default. (Another Fidelity client reports that most of the time the web UI does offer old addresses for reuse.)

(Also note, the web interface for QCDs is apparently not available for Fidelity managed accounts.)

The other alternative was for them to paper mail me checks made out to each charity, which I would re-mail. But either way, without them saving the name and address for each charity, this would be too cumbersome (for me) even for annual gifting.

(Or maybe not? One person told me they save the many envelopes and forms from charity begging letters, has Fidelity send them a batch of checks made out to charity names but with no addresses required, then stuffs and mails them in the envelopes. This does preclude change-of-address tracking, so long as every charity sends at least one begging letter every year.)

Fidelity proposed that instead, I fill out some kind of form to file a list of charities with them, and must get a Medallion signature guarantee to use it! Because of (reasonably enough) the security risk otherwise. (But what stops anyone who hacks my account from creating one large QCD sent to themselves, up to the balance in my cash/core account?)

Further study resulted in finding another alternative Fidelity didn't mention to me, and saving some directions from Google, which I'll try next time. It said in part:

Use the Fidelity IRA Qualified Charitable Distribution Form.

Yup, the form says this in part, which looks promising: All checks will be made payable to the qualifying charity(ies). If you have multiple charities and cash is already available, you may also attach an Excel spreadsheet with this form. Please include the charity name, charity address (if applicable), and the amount for each charity.

And also: For faster processing, complete, sign, and submit using the digital uploading process: 1. Complete the form, sign, and gather any necessary documents. 2. Scan or take a digital photo of the entire form and any required documents. 3. Scan the QR code or go to Fidelity.com/upload-QCD to submit your files or photos.

And here's the rest of what Google suggested:

To ensure a back-office processor handles your spreadsheet successfully, execute these specific steps:

• Format the Spreadsheet: Create a simple table with exactly three columns: Charity Name, Mailing Address, and Donation Amount.

• Liquidity Check: Ensure you have enough uninvested cash sitting in your IRA core position to cover the sum total of all donations.

• Fill Out the Form: Complete Section 1 with your personal information. In the charity details section, write "See attached Excel spreadsheet for N charities" across the boxes.

• Submit via Secure Message: Do not standard-email this, as it contains your Social Security and account number. Log into your Fidelity account online, go to the Secure Message Center [this is hard to find, look at the bottom of the "Contact Us" page], select "Account Forms," upload the completed PDF form, and attach your Excel spreadsheet.

And here are some issues I've encountered while making any charitable donations:

• For many years I laboriously wrote and paper-mailed checks annually to 15-20 charities, often using the forms and return envelopes they mailed to me (way more than I'd like). I got tired of that and started batching up donations through the credit union's Web Bill Pay system, which has also improved over time. That way I can add, modify, delete, list, and reuse payees. What could go wrong?

• For unknown reasons the CU would always delay actual payments for many days, with no way to speed that up. I learned to never issue donations near the end of the monthly statement cycle, else they'd bleed across unresolved into the next month, making bookkeeping messier.

• But conversely they'd often send the money by some kind of EFT, not by a paper check, when they "knew" the recipient's info (somehow). That's fine with me. But sometimes months later I would see a payment refunded to my account without explanation. I'd just shrug, book it back in, deduct it from my annual donation (tax deduction) logfile, and forget about it for that year.

• Sometimes a charity quietly changes their mailing address. If I don't save every paper mail from them begging for more money, and cross-check the addresses (a pain), and if the CU didn't use EFT or somehow notice and fix the destination (for some bigger charities at least), that could also cause a failure -- usually reported sooner though.

• With CU Web Bill Pay I could attach a short memo (if I remembered to do it) like "annual donation" or "membership". For some charities like the Planetary Society, membership dues are actually deductible (qualified) donations, since they're 501(c)(3) entities. But repeatedly I've run into snags where the charity misattributes my donation, either not crediting me or not calling it a membership renewal, resulting in many paper or electronic mails months later asking for my annual donation (they don't think they've gotten yet), or to renew my membership. They myopically want everyone to use their donation or membership process or paperwork, not batch up payments like this for my convenience.

  Best I can tell now, the Fidelity QCD system does not even allow me to add a "memo" like "membership" (or an account number) to any payments. (But one correspondent says there is a way to do it.) That's going to make life even more interesting. I'm already conversing with some entities suggesting they be smarter about receiving "push" donations like mine.