Utilize QCDs to Help Clients Satisfy RMDs

Mar 31, 2026

For many retirees, Required Minimum Distributions (RMDs) create taxable income they don't need. A Qualified Charitable Distribution (QCD) offers a simple way to satisfy an RMD while reducing adjusted gross income (AGI) and supporting charitable priorities.

Partnering with the Community Foundation of Greater Des Moines allows your clients to direct a single QCD to support multiple local causes through a strategic, tax-wise solution.

There are a few important things to remember to maximize tax efficiency with AGI reduction:

  • Beyond the Standard Deduction: A QCD is excluded from taxable income entirely, providing a tax benefit even for clients who do not itemize.
  • Manage "Stealth Taxes": Lower AGI can help reduce Medicare premiums (IRMAA surcharges) and the taxation of Social Security benefits.
  • 2026 Planning: QCDs are not subject to the new 0.5% AGI floor for itemized deductions or the 35% cap on deduction value for high-income earners.

The 2026 QCD limit is $111,000 per taxpayer. To streamline the administration of QCDs we recommend two approaches:

  • One Transfer, Many Causes: Instead of coordinating multiple IRA checks to various charities, clients make one QCD to the Community Foundation, to support their charitable goals.
  • From Annual Gifts to Lasting Legacy: We help your clients move from transactional annual giving to transformational legacy planning, ensuring their retirement assets support the community long after their lifetime.

Flexible Giving through Community Foundation Funds

While QCDs cannot be directed to Donor Advised Funds (DAFs), your clients can achieve similar goals by directing their QCD to other eligible fund types at the Community Foundation:

  • Designated or Agency Funds: Support specific local nonprofit organizations.
  • Field of Interest Funds: Target broad causes, such as education, the arts or the environment.
  • Split-Interest Vehicle: In 2026, clients can use a one-time QCD election of up to $55,000 to fund a Charitable Gift Annuity (CGA) to support their favorite charitable organization's endowment.

Important 2026 Reminders

  • Eligibility: Clients must be at least 70 1/2 to initiate a QCD. 
  • Direct Transfer: Funds must move directly from the IRA custodian to the Community Foundation to maintain tax-free status.
  • Documentation: While the 1099-R does not distinguish a QCD, we provide the necessary charitable receipt to ensure correct reporting.