In addition, traditional IRA owners who are age 73 or older have a required minimum distribution (RMD). The RMD starts at approximately 3.8% and increases each year as the IRA owner becomes older. The QCD from an IRA will count towards a taxpayer’s RMD.

To qualify as a QCD, the distribution must be sent directly to a qualified charity. Some IRA custodians will send a check to the IRA owner for distribution to the charity, however, the check must be payable only to a qualified exempt organization. Because it may take time for some custodians to process the request, the IRS urges IRA owners to initiate the QCD process by early December. This ensures sufficient time to make certain that the transaction has been completed by December 31, 2024.

The maximum QCD, which is indexed each year for inflation, is $105,000 in 2024. If a married couple are both over age 70½, they could potentially contribute double the limit to charity, up to $210,000.

For IRA owners who are planning for next year, the IRS has released the inflation-adjusted number for 2025. In 2025, individuals will be able to transfer $108,000 from an IRA to charity as a QCD.

If the IRA custodian does make a transfer to a charity, the IRA owner will receive IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans. The IRS Form 1040 for tax year 2024 will require the IRA distribution to be reported on Line 4a. If the full distribution is a QCD, the taxpayer will enter "0" on Line 4b of his or her tax return.

A charity must send the donor a written acknowledgment of the IRA contribution. This is not a receipt because the gift is not included in the donor’s income and is not deductible. However, the written acknowledgment from the charity must state that "no goods or services were received" in return for the IRA gift.

IRS Publication 526, Charitable Contributions and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) have additional information on the procedures for substantiating a gift from your IRA.

Not only was this process rather cumbersome, it also resulted in increased adjusted gross income. With higher income, you may pay more income tax on Social Security or pay a higher Medicare Part B premium. That’s why an IRA charitable rollover may be a great option.

The IRA charitable rollover is very simple. An IRA owner who has reached the age of 70½ may transfer up to $105,000 per year. The transfer is made directly from the IRA to a qualified public charity. The IRA rollover is not taxable on your income tax return, so there is no need for a tax deduction. It is a simple and effective way to make a charitable gift.

The IRA charitable rollover or qualified charitable distribution (QCD) limit of $105,000 will be indexed for inflation in 2025. The Secure 2.0 Act expanded the QCD by allowing a one-time transfer of up to $53,000 to a charitable remainder annuity trust, standard charitable remainder unitrust or immediate charitable gift annuity.

Mary Makes a Convenient Gift

Mary Smith is a retired teacher who recently turned 73. She regularly volunteers for her favorite charity and makes a gift each year of $2,000. Last year, Mary withdrew $2,000 from her IRA, reported that amount in her taxable income and then wrote a check to charity. Because the gift was over $250, the charity sent Mary a receipt. She deducted the $2,000 charitable gift on her tax return.

Mary heard from a friend about the IRA rollover option. She called the development director at the charity and asked about using an IRA rollover to make her annual gift. Mary would simply need to contact her IRA custodian and have the IRA gift transferred to her favorite charity.

Mary contacted the large financial company that managed her IRA and filled out a distribution form. She asked that the financial company make a “qualified charitable distribution” of $2,000 to her favorite charity. The financial company then transferred the $2,000 directly to her favorite charity. The balance of her required minimum distribution for that year was distributed to Mary. She reported her IRA distribution on her tax return, but did not pay tax on the $2,000 gift to charity.

Mary loved the simplicity of the IRA charitable rollover. The $2,000 gift to charity was not taxed on her income tax return and she did not have to itemize to take the deduction. The simplicity and convenience of this gift was a wonderful benefit for Mary.

Judy Takes the Standard Deduction

Judy is a retired nurse and a volunteer for her favorite charity. During her working years, Judy had sufficient income and lived a moderate lifestyle. She saved regularly and contributed to her IRA. With good investments and tax-free growth, Judy's retirement plan has increased to over $435,000.

Judy is age 78, owns her home and has more income than she needs. Each year she makes a gift of $1,000 to charity. Because she does not report home mortgage interest or have enough other deductions to itemize, Judy takes the standard deduction. But she has heard about the IRA charitable rollover and wonders if that will be a good option. She asked her best friend, “Do you think that I should give the $1,000 from my IRA?”

Each year Judy withdraws the $1,000 from her IRA. It increases her income by $1,000. Because she gives the $1,000 to charity and takes the standard deduction, Judy does not reduce her income taxes with her charitable gift. The $1,000 IRA withdrawal increases her income, but Judy does not benefit from a charitable deduction.

A better plan is for Judy to give $1,000 directly from her IRA to charity. The IRA charitable rollover reduces her income by $1,000 and saves taxes.

Judy was pleased to learn that she could roll over $1,000 from her IRA to her favorite charity. Best of all, Judy was able to make the gift and reduce her current taxes. Judy spoke with her best friend and noted, “An IRA charitable rollover is a great plan. I helped those in need through my favorite charity and also lowered my taxes!”

Bruce is a Very Generous Donor

Bruce retired several years ago, but remained active during his retirement years. Recently, Bruce started volunteering with a local charity. He devotes several hours a week to his volunteer work and receives great satisfaction through helping others.

Since Bruce lives moderately and has good income from his retirement plan and investments, he is a generous donor. In fact, Bruce donates 60% of his income each year and lives on the balance. He feels that this is an opportunity for him to “give back” to society for the good life he has been able to lead. But Bruce would like to do more. Is there a way for Bruce to help even more?

The charity has a special project underway. Bruce understands the importance of this charitable project and would like to make an additional gift of $20,000. He checked with his CPA, who explained that he qualifies for a tax-free IRA charitable rollover. As a result, Bruce was able to contact his IRA custodian and have a gift of $20,000 sent to the charity. The charity honored Bruce for his generous gift. Bruce is happy with his rollover gift. It was not included in his taxable income and he was able to deduct his regular charitable gifts.

Bruce noted, “I am very pleased with my IRA gift. Because it was not included in my income, I am able to deduct my regular gifts and still help with an added gift of $20,000!”

Claire Simplifies Her Taxes

Claire is a retired investment advisor. Over the years, she watched her IRA blossom and grow into the largest asset in her estate. Based on her age of 78 and the increased IRA value, her required distribution this year is nearly $105,000!

Claire is a frequent volunteer for her favorite charity and wants to make a major gift to a special project. In November, she decided that she had sufficient other income and did not actually need the IRA distribution for this year. With the growth of her IRA, it was logical to make the charitable gift from her IRA. But how can this work? Is this a good tax planning strategy?

Claire contacted her CPA Susan to discuss the best way to make her major gift. Susan explained to Claire the benefits of making a tax-free IRA charitable rollover. By not taking the $105,000 into her income, Claire will benefit in several ways. Her income will be lower and she will not have other tax benefits phased out. She will have a reduced income level and pay a lower Medicare Part B premium.

Claire responded, “I don’t understand all of that tax talk, but it does make sense that with $105,000 less in taxable income, my return will be easier to complete. Plus, there are those other savings that you mentioned. This sounds like a great idea!”

The next day, Claire contacted her IRA custodian and had the full $105,000 IRA distribution sent to her favorite charity. She and her CPA Susan were both delighted. Claire made a wonderful gift and her tax situation was simplified.

How to Give From an IRA

The IRA rollover requires a payment by your IRA custodian to a qualified public charity. IRA custodians are generally familiar with the IRA charitable rollover and may use the IRS term, the “qualified charitable distribution.”

Your first step is to contact the IRA custodian. Most IRA custodians have a standard IRA distribution form. Some IRA custodians have added the IRA charitable rollover as an option to this form. As the IRA owner, you will need to sign the application and indicate the amount of the gift and the correct legal name, city and state of the public charity.

After your IRA custodian has received the form and processed the transfer, it will pay the specified amount to the public charity. This gift can be made for a specific purpose. For example, the gift could be to a specific relief fund, to a scholarship fund or to another “field of interest fund” with a charity. If you have a specific goal for your IRA charitable gift, you will want to contact the charity to confirm the gift will be used for that purpose.

Preparing a living will is a smart decision that gives you a say in how you want to be treated at the end of your life. Here is what you should know, along with some resources to help you write one.

What to Prepare

To adequately explain your wishes regarding your end-of-life medical treatment you need two legal documents: A “living will” which outlines the kind of care you want to receive if you become incapacitated, and a “health care power of attorney” (or health care proxy) which names a person you authorize to make medical decisions on your behalf if you become unable to.

In some states, these two documents are known as an “advance directive” and will only be utilized if you are too ill to make medical decisions for yourself. You can also amend it at any time in the future.

It is not necessary to hire a lawyer to prepare an advance directive. Each state has its own laws relating to signing and witness requirements, and some states have standard forms that you may use. In addition, there are several free or low-cost “do-it-yourself” resources available to help you create one, and it takes only a few minutes from start to finish. These resources are offered by various companies and not-for-profit agencies.

You should search online to find assistance using key search terms such as “make a living will” or other variations. You will want to look for well-established organizations and review the services they provide and any associated fees. For ease of access, consider using a company that will electronically create and store your living will. If you are a veteran, the VA also provides a free advance directive form specifically at VA.gov/find-forms/about-form-10-0137.

Add-ons

You should also consider executing a do-not-resuscitate order (DNR) as part of your health care planning. A DNR may protect you from unwanted emergency care like cardiopulmonary resuscitation (CPR). To create a DNR, your doctor must fill out a state-approved form and you both will need to sign it.

Another tool that will complement your advance directive is the Physician Orders for Life-Sustaining Treatment (POLST) or the Medical Orders for Life-Sustaining Treatment (MOLST). A POLST or MOLST translates your end-of-life wishes into medical orders that must be honored by your doctors. These are prepared by your medical provider and address concerns relating to specific conditions. To learn more about these documents and to see if they are appropriate for you, consult with your medical provider.

Inform Your Family

To ensure your final wishes are followed, make sure to inform your family members, health care proxy and doctors of your preferences. You should also provide each of them with a copy of your advance directive or, if you create a digital version, make sure you share it electronically.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

It is helpful for owners of traditional IRAs to understand how to do a QCD, what is required to report a QCD on your tax return and the required information on your acknowledgment from the nonprofit.

1. How to Set Up a QCD — A traditional IRA owner may contact his or her IRA custodian to start the process for a QCD. While your distributions from a traditional IRA are normally taxable, the QCD payouts will be tax-free as long as they are paid directly to a qualified nonprofit. The QCD is made through a check payable to the nonprofit. An electronic payment or a check made out to the IRA owner does not qualify as a QCD. The owner must be age 70½ or over and the 2024 limit is $105,000. If both spouses are over age 70½, and have their own IRA, then the $105,000 per person limit may allow a couple to distribute up to $210,000 per year to the nonprofit. Since QCDs are not taxable, there will be no charitable deduction for making the gift.
2. How to Report Your QCD — Your QCD must be reported on your 2024 federal income tax return. You can expect to receive an IRS Form 1099-R from your IRA custodian. This will show the traditional IRA distribution in Box 1. Generally, you will report the IRA distribution on Line 4 of IRS Form 1040 (the final IRS 2024 tax return may use a different line but is likely to use Line 4). You will enter the total amount of the IRA distribution on Line 4a. If the full amount is a QCD, you then enter zero on line 4b. If part of the distribution is a QCD, the taxable portion is normally entered on Line 4b. You must enter "QCD" next to Line 4. If you have entered zero on Line 4b, the entire QCD will not be taxable.
3. How To Receive a QCD Acknowledgment — Your QCD is not deductible as a charitable contribution. However, you are required to obtain a written QCD acknowledgment from the nonprofit prior to filing your return. This acknowledgment should state the date and amount of the QCD and that the donor has received "no goods or services in exchange for the gift." You should retain the acknowledgment with your other 2024 tax records.

Editor's Note: Many individuals will fulfill part or all their RMD this year through a gift to charity from a traditional IRA. It is best to start the gift process in November or early December. Some IRA custodians may take longer than expected to process the transfer. If a donor has the right to make distributions from his or her traditional IRA through a checkbook, it will be important to send the check directly to the charity. A donor must allow sufficient time for the charity to deposit the check and for the financial institution to process the check. This process must be completed by December 31, 2024 to qualify as an RMD for 2024.