If you are age 70½ or older and have an IRA, you can make a charitable gift in a way that may also reduce your taxable income. This is called a Qualified Charitable Distribution, or QCD. It allows you to transfer money directly from your IRA to a qualified charitable organization without paying income tax on the amount you give. It is one of the most tax-efficient ways to make a difference in your community.
What are QCD’s and RMD’s?
To understand how a QCD works, it helps to first know about Required Minimum Distributions, or RMDs. The IRS requires individuals to begin taking annual withdrawals, called RMDs, from certain tax-deferred retirement accounts once they reach a specific age. These include traditional IRAs, SEP IRAs, and SIMPLE IRAs. These accounts have grown tax-free over the years because you have not yet paid income tax on the funds. Once you reach the required age, you must begin taking a minimum amount each year, and those withdrawals are taxed as ordinary income.
Under the SECURE Act 2.0, individuals must begin taking RMDs at age 73 if they turned 72 after December 31, 2022. Beginning in 2033, the required age will increase to 75 for people born in 1960 or later. These changes reflect longer life expectancies and allow retirees more time to keep their savings invested before being required to withdraw funds.
A QCD, however, is available only from IRAs. You can begin making QCDs once you reach age 70½, even though your RMDs may not start until later. The IRS allows you to transfer up to the annual limit, which is $108,000 per person in 2025, directly from your IRA to a qualified charitable organization. The money must go straight from your IRA custodian to the charity, meaning it does not count as taxable income to you. If you are already taking RMDs, your QCD can satisfy that requirement.
Employer-based plans such as 401(k)s and 403(b)s cannot be used for QCDs. However, if you have one of those plans, you can roll the balance into an IRA and then make a QCD from the IRA. Private foundations and donor-advised funds are not eligible recipients of QCDs.
By giving through a QCD, you can meet your retirement requirements, reduce your taxable income, and make a meaningful impact on the causes you care about most. It is one of the simplest and most tax-efficient ways to give back during retirement.
Giving Through OCCF
While QCDs cannot be made directly to a Donor-Advised Fund (DAF) (the IRS views that as a personal benefit), you can donate directly to a qualified nonprofit organization or partner with OCCF to achieve your giving goals. OCCF offers several fund options that qualify for QCDs:
Support a cause you care about — such as education, health, the environment, or the arts — through an established OCCF fund or by creating your own. OCCF manages the grants on your behalf, directing your support to the nonprofits making the greatest impact in your chosen area. Some field of interest funds at OCCF include:
African American Alliance Fund
Orange County Social Justice Fund
Hispanic Education Endowment Fund
Orange County Opportunity Initiative
The Future is Working: OC Workforce Development Initiative
Orange County Veterans Initiative
Please visit our Explore Funds at OCCF page on our website to learn more.
Provide lasting support for the nonprofits you love by donating to or creating an endowed fund that gives them long-term financial stability. Through a nonprofit endowment, OCCF ensures your chosen organization receives ongoing annual grants, forever.
With an endowed fund, the original gift amount stays intact while it’s invested alongside OCCF’s $800 million portfolio. Each year, 4.5% of the fund’s value is distributed as grants, allowing the remaining balance to continue growing.
Endowments are especially helpful for smaller nonprofits that may not have the capacity to manage complex donations. By partnering with OCCF, they can rely on our investment expertise and administrative support to convert gifts into a lasting source of funding.
Join others in strengthening the enduring role of OCCF itself, ensuring that local philanthropy continues to meet Orange County’s most pressing needs for generations to come.
Each of these donation options qualify to receive QCD — and your contribution will not be included in your taxable income for the year.
Leave a Legacy with Your IRA
If you’re not ready to make a QCD gift from your IRA, you can still create a legacy and support the causes and charities you care about by naming your Legacy Fund at OCCF the full or partial beneficiary of your IRA. While the IRS does not allow you to donate IRA distributions to your personal DAF while you are living, there are no restrictions once you have passed.
A Legacy Fund at OCCF is simple to set up and can be completed in a short time. It involves signing a simple agreement and working with OCCF to establish your giving guidelines. There is no fee to establish the agreement or to make future changes.
Doing so ensures that 100% of your IRA balance goes to the charitable causes you care about — rather than being taxed when left to individual heirs.
Start Your Tax-Smart Giving Journey
Making a QCD is simple and rewarding. Your financial advisor or IRA custodian can help you initiate the transfer, and the OCCF team can guide you in selecting the fund that best aligns with your charitable goals.
