How an IRA Charitable Rollover or QCD Can Benefit You and SW Washington

If you’re age 70½ or older, there is a simple, tax-smart way to support the causes you care about that many people overlook. The Qualified Charitable Distribution (QCD) is sometimes called an IRA charitable rollover, and it is one of the most effective giving tools available to retirees.

Many donors in southwest Washington use this strategy to reduce their taxable income while investing in the health and vibrancy of our community. There are some restrictions involved, so I’ll explain how it works.

What are QCDs and RMDs?

A QCD allows you to transfer up to $108,000 (2025 IRS limit) directly from your IRA to a qualified public charity, including eligible funds at the Community Foundation for Southwest Washington. Because the distribution goes straight to charity:

• It is not counted as taxable income,
• Satisfies the Required Minimum Distribution (RMD) most accounts force retirees to take,
• Reduces Medicare premiums and potential taxes on Social Security benefits, and
• Potentially avoids future estate tax.

These benefits apply regardless of whether you itemize your deductions, providing a major advantage for many retirees.

How and When QCDs Benefit Donors

A QCD can be especially useful if:

• You don’t itemize your deductions
• An increase in taxable income could reduce your eligibility for other deductions or credits
• You’re required to withdraw funds you don’t need for daily living
• You want to give more tax-efficiently and simplify your charitable planning

Many donors also appreciate that IRA assets are not always tax-efficient to pass on to heirs. Directing a portion of these funds to charity can maximize impact while reducing tax burdens.

Important Rules Related to QCDs

A QCD must meet the following requirements:

• You must be 70½ or older at the time of distribution
• Gifts must come from a Traditional or Roth IRA
• Contributions must be made directly to a public charity — you cannot receive the funds first
• QCDs cannot flow to Donor Advised Funds, supporting organizations, private foundations, charitable gift annuities or charitable remainder trusts
• You may give up to $108,000 per taxpayer per year, assuming joint filers have separate individual accounts
• Gifts cannot involve goods or services in return

Your financial advisor or IRA custodian can help you initiate the transfer. Our team is also happy to coordinate with them.

How Do QCDs Work?

So, how does a QCD work? You contact your IRA administrator (custodian) and instruct them to send a portion of your IRA funds directly to a qualified charity. This amount is reported as an exclusion on your tax return (Form 1040), lowering your overall taxable income. In this way, QCDs act like an above-the-line deduction.

Choosing Where Your Gift Makes the Most Impact

Trends show the IRA charitable rollover has resulted in billions of dollars in donations to charitable organizations. While the process is simple, choosing which nonprofit to support can be challenging for some donors. This is where the Community Foundation can help.

We bring a deep understanding of local needs and causes, strategic giving advice and a suite of community funds that pool donations for greater impact. These funds make giving easy because they leverage the decision-making processes and expertise of our grant and scholarship committees. A few such options for donors using QCDs include:

• The Community Giving Fund opens pathways to prosperity for historically underserved communities through Focus Grants.
• The Social Justice and Resiliency Fund supports nonprofits addressing systemic challenges with creativity and compassion.
• The General Scholarship Fund brings postsecondary dreams within reach for underrepresented students in southwest Washington.
• You can also open a designated, field-of-interest or scholarship fund that addresses important community needs.

How The Community Foundation Helps You Navigate the QCD Process

We specialize in helping donors give more strategically with less complexity. When you give through the Community Foundation, you gain:

• A trusted team that can help you and your advisors navigate rules and timelines
• A wide range of charitable fund options to match your goals
• Deep knowledge of local needs and opportunities
• Confidence that your gift supports your values and high-impact work

We're here to help

If you’re interested in using an IRA charitable rollover or want to explore whether a QCD fits your financial and charitable goals, our team is ready to support you. We can explain the mechanics, coordinate with your advisors and help you direct your generosity to the causes and communities you love.