Without this special rule, taking a distribution from your IRA and donating the proceeds to a charity would involve many steps and could possibly be more costly. You would need to request a distribution from the IRA and then make the contribution to the charity yourself.

You would include the distribution in gross income for the year and then take a corresponding income tax deduction for the charitable contribution. But due to IRS limits, the additional tax from the distribution may be more than the charitable deduction you receive.

Due to higher standard deduction amounts being extended in 2025 by the One Big Beautiful Bill Act (OBBBA), itemizing deductions has become less beneficial for many people, rendering QCDs even more appealing.

For a distribution to be considered a Qualified Charitable Distribution, it must be distributed directly from your IRA account to a qualified charitable organization. If you actually receive the IRA distribution and then donate it to a charity, it would not qualify as a QCD.

To make a charitable distribution, Windward can either:

• Instruct Charles Schwab to request a check be made payable to a qualified charity.

• Or to facilitate QCDs more easily, we set up check-writing on a separate IRA that we refer to as your charitable IRA.

If you have a large balance in your IRA, for security reasons we recommend transferring a small balance to a cash-only second IRA to exclusively be used for qualified charitable distributions. We refer to this as your charitable or QCD IRA. Check-writing is established on the second IRA so you can make check contributions at your discretion. Utilizing the checkbook makes recordkeeping simple.

We fund the second IRA with cash transferred from your primary IRA. We can move cash between the IRAs easily. Moving cash in to your charitable or QCD IRA is a nontaxable event and is not a distribution. Transferring cash from your primary IRA to your QCD IRA is not considered a qualified charitable distribution.

In general, yes. QCDs are a great option because they provide an exclusion from income for the amount paid directly from your IRA to the qualified charity, and count as distributions toward satisfying your Required Minimum Distribution.

Although you will not receive a charitable contribution deduction for your qualified charitable distributions, being able to exclude the distributions from your gross income often provides a greater tax benefit.

Ensure the donee cashes the check in the current year, especially if you need your Qualified Charitable Distribution to count towards your Required Minimum Distribution. For example, if a donor wrote a QCD check dated 12/31/25 but the check doesn’t clear until 1/5/2026, it will be considered a 2026 qualified charitable distribution.

The qualified charitable distribution is considered complete in the year the check is cashed. If you have a Required Minimum Distribution to fulfill and you make year-end contributions, we typically recommend sending those checks no later than November 30th to ensure they clear in the current year.

You will need to keep track of your total QCDs for the year. Report the total distribution from your IRA (including charitable distributions) which is reported on form 1099-R. Enter the total IRA distribution amount in the IRA Distributions box (4a) then enter the taxable amount in box (4b) and check the QCD box. Your QCDs are not taxable distributions.

If you work with a tax preparer, make sure they are aware of the QCD total for that tax year.

We have had some clients successfully set this up with their church or other organization, using the routing and account number on the checks.

That’s okay! What’s important is ensuring that any Required Minimum Distribution has been distributed out of (either the primary or charitable) IRA by 12/31.

Contact Windward at 913-381-7411 and we can arrange to transfer more funds from your primary IRA.

For 2026, you can exclude up to $111,000 from your income annually by making charitable distributions. Any amount donated above your RMD does not count toward satisfying a future year’s RMD.

1. A QCD must be an otherwise taxable distribution from your IRA. Meaning, if you’ve made nondeductible contributions to your IRA then each distribution normally carries with it a pro-rata amount of taxable and nontaxable dollars. A special rule applies to QCDs however — the pro-rata rule is ignored, and your taxable dollars are treated as distributed first.

2. Only the account owner can sign the checks on the charitable IRA.

3. Many IRAs are eligible for QCDs such as Traditional, Rollover, and inactive SEP and SIMPLE plans. Under certain circumstances, a QCD may be made from a Roth IRA.