Qualified Charitable Distributions & Charitable Gift Annuities: Tax-Efficient Ways to Give

Giving to organizations and charities that are impactful in your community or around the globe is a cornerstone of leadership and success. Not only are you supporting impactful work, but you also are building a stronger sense of self-worth by gifting to a cause you believe is essential.    

As you develop a strategy around your gifting, it’s worth your time to consider options like Qualified Charitable Distributions, Charitable Remainder Trusts, and Charitable Gift Annuities, as they may offer additional benefits come tax season.    

What are QCDs and How Do They Work?   

A Qualified Charitable Distribution (QCD) is a direct transfer of money from your Individual Retirement Account (IRA) to a qualified charity. This strategy can be a tax-efficient way to fulfill your charitable giving goals, especially if you’re required to take Required Minimum Distributions (RMDs). The funds are transferred directly from your IRA to the charity, bypassing your taxable income and satisfying all or a portion of your annual RMD requirement.   

To be eligible for a QCD, you must be 70½ years old or older, make the distribution directly from your IRA to a qualified charity, and not claim the distribution as an itemized deduction on your tax return. QCDs must be made by December 31st of the year you want to claim the tax benefit, and the distribution must be made to a qualified public charity. The maximum amount you can donate in a year through a QCD is $105,000 for tax year 2024. This amount increases to $108,000 for tax year 2025.    

Secure Act 2.0 Updates for Charitable Remainder Trusts & Charitable Gift Annuities  

 Secure Act 2.0, enacted in January 2023, added a new avenue for investors looking for creative ways to donate funds tax-efficiently. Donors can now make a one-time distribution from their IRA accounts to a qualified charity to create a charitable remainder trust or a charitable gift annuity. As of 2024, the maximum one-time distribution is $53,000. As of 2025, that number will increase to $54,000. Both charitable remainder trusts and charitable gift annuities can generate an income stream while accomplishing a donor’s gifting goals.  

Get Support with QCDs, CRTs, and CGAs   

While Charitable Remainder Trusts (CRTs), Charitable Gift Annuities (CGAs), and Qualified Charitable Distributions (QCDs) offer unique benefits for charitable giving, understanding their specific nuances is crucial.  

CRTs and CGAs provide a reliable income stream and a partial charitable deduction while supporting a chosen charity, while QCDs allow IRA owners to bypass their taxable income and fulfill their RMDs through gifts directly to charities. You can determine which strategy best aligns with your circumstances by carefully considering your financial goals and charitable aspirations.   

Our team at Maner Costerisan can help evaluate your situation and review your finances to help create a charitable contribution plan that helps support the causes and organizations you care about while providing you with the best possible tax benefits. Contact the experts today at maner@manercpa.com or by calling us directly at 517-323-7500.