For clients over age 70½ with IRA assets, charitable giving is often framed as a tax question. What can I do with my required minimum distribution (RMD)? Is there a smarter way to give than just writing a check?
For the right clients, the distribution is just the starting point. The deeper opportunity lies in how charitable intent, retirement income needs, and tax efficiency can be addressed together.
The Income Exclusion That Changes the Math
A qualified charitable distribution (QCD) allows clients age 70½ or older to transfer funds directly from a traditional IRA to a qualified charity. The amount—up to $111,000 per individual in 2026, or $222,000 for married couples who each have their own IRA—is excluded from gross income entirely, regardless of whether the client itemizes.
That income exclusion is where significant planning value may be found. Keeping those dollars off the client’s tax return can affect Medicare premium surcharges, the taxation of Social Security benefits, and exposure to the net investment income tax. For clients in these situations, a QCD may be meaningfully more efficient than a cash gift paired with an income tax deduction.
When Giving Can Also Generate Income
The SECURE 2.0 Act added another dimension worth considering: the ability to fund a charitable gift annuity (CGA) using a QCD. For clients who are charitably motivated but also value predictable income, this combination may be worth exploring.
A CGA is a contract between a donor and a nonprofit organization. The donor makes a gift, and in return the organization provides fixed payments for life—sometimes extending to a surviving spouse. When funded with a QCD, the transfer goes directly from the IRA to the charity.
To qualify, the donor must be at least 70½ and may contribute no more than $55,000. This $55,000 limit counts against the donor’s standard annual QCD ceiling, which is $111,000 per individual in 2026. It is also a one-time option — once used, a QCD may never again be used to fund a CGA in any future year.
Consider Debbie Donor, age 72 and retired, who uses $55,000 from her IRA to fund a CGA as a QCD. Because that $55,000 counts against her $111,000 annual limit, she may still make outright QCDs of up to $56,000 to other charities in the same year. However, she has now permanently used her one-time CGA opportunity. In all future years, Debbie may continue making outright QCDs up to the annual inflation-adjusted ceiling, but she will never be permitted to use a QCD to fund another CGA.
It’s also worth noting that because CGA payments are fixed at the time the annuity is established, they offer predictability but may not keep pace with inflation over time, which means purchasing power could erode. That tradeoff is worth discussing openly with clients as part of the broader planning conversation.
The annuity payments are fully taxable as ordinary income, and no charitable deduction is available. However, the initial transfer is still excluded from gross income, which may preserve those downstream AGI benefits. For clients navigating RMDs, philanthropic goals, and a desire for lifetime income, this strategy may be worth evaluating.
Recognizing the Right Client
Most of these conversations don’t start with a client asking about QCDs or gift annuities. They start with something broader—a concern about RMDs, a question about retirement cash flow, a desire for fixed income, or a simple expression of wanting to give back.
Clients who are already in RMD territory, have charitable intent, or are thinking about income longevity may be natural candidates for these strategies. So are clients whose modified AGI is near a threshold that affects Medicare premiums or Social Security taxation. When those factors come together, a QCD or QCD-funded CGA may be worth exploring further.
Not every nonprofit is licensed to issue gift annuities, and requirements vary by state. Early coordination matters here, as these arrangements involve multiple parties and can take time to structure properly.
The Phone Call That Sets Everything in Motion
As you work through planning conversations this year, consider encouraging clients to reach out directly to the organizations they care most about. Many nonprofits have planned giving professionals who can work alongside advisors and tax professionals to help identify the most appropriate approach.
The strongest outcomes tend to emerge when everyone is at the table early—and that conversation often starts with you.
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Bill Knox, J.D., LL.M. is TIAA Kaspick Senior Director, Technical Consulting & Strategic Innovation Projects. Mr. Knox joined TIAA Kaspick in 2012 after serving for more than seven years as vice president of legal services at Crescendo Interactive, Inc. In his current role, he advises clients on all aspects surrounding planned gifts, including legal, tax, and administration issues. He has presented on a variety of planned giving topics at both regional and national events.
Mr. Knox has a BA from the California State University, Chico. He received his JD from the Columbus School of Law at the Catholic University of America and his LLM in tax from Loyola Law School.
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Tags: charitable giving, charity, giving, ira, tiaa, tiaa kaspick
