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Every year, thousands of your most faithful members face an unexpected tax bill simply for getting older.
Once someone turns 73, the IRS requires them to take a Required Minimum Distribution (RMD) from their IRA. Whether they need that money or not, those withdrawals are counted as taxable income. For many seniors, especially those who already have stable retirement income, those RMDs can trigger higher Medicare premiums, increase their Social Security taxation, or push them into a higher tax bracket.
But, there is something they can do to lower the tax burden. Through a Qualified Charitable Distribution (QCD), members can send part or all of that required withdrawal directly to your church, completely tax-free.
Instead of paying more to the IRS, they can redirect those dollars to Kingdom work. And when your team knows how to identify, educate, and facilitate QCD gifts, it can unlock a powerful new stream of generosity, especially in Q4, when these decisions must be made before December 31.
In this guide, we break down everything church leaders need to know about Qualified Charitable Distributions, what they are, how they work, and how to build a repeatable year-end strategy that benefits both your congregation and your mission.
Quick editor’s note: Before we dive in, this guide is provided for educational purposes only and should not be considered legal or tax advice. Donors should consult their financial or tax advisor when making charitable contributions.
A Qualified Charitable Distribution is a direct transfer of funds from an Individual Retirement Account (IRA) to a qualified charity, like your church. The transfer counts toward the individual’s Required Minimum Distribution (RMD), but it’s excluded from their taxable income.
However, you must abide by strict eligibility requirements.
In short, it’s a way for older members to give more strategically while avoiding additional taxes.
On the other hand, a required minimum distribution is the amount the IRS requires retirees to withdraw annually from their tax-deferred retirement accounts. Under the SECURE 2.0 Act, the RMD age increased from 72 to 73 (and will rise to 75 in 2033).
When retirees take their RMD, that withdrawal is included in taxable income unless it’s redirected as a Qualified Charitable Distribution.
Let’s look at how this works in practice. Imagine a church member who needs to withdraw $10,000 from their IRA to meet their annual Required Minimum Distribution (RMD). If they take that $10,000 as a normal withdrawal, it’s added to their taxable income. Assuming a 25% tax rate, they’ll owe about $2,500 in taxes, which only leaves $7,500 in their pocket.
Now picture that same $10,000 sent directly from their IRA to the church as a Qualified Charitable Distribution (QCD). Because the funds never pass through their personal account, the amount isn’t included in taxable income at all. The donor pays no taxes on the transfer, and the church receives the full $10,000.
That simple change of redirecting a required withdrawal instead of taking it personally can mean thousands of dollars in tax savings for the donor and a larger, tax-free gift for the church. It’s one of the most powerful, IRS-approved ways to maximize generosity without increasing anyone’s tax burden.
Timing matters since the IRS applies a first-dollars-out rule. This means the first funds withdrawn from an IRA each year count toward the RMD.
If a donor takes their RMD as a standard withdrawal in January, they can’t later reclassify that withdrawal as a QCD in December. The QCD must be processed before the donor has met their RMD through taxable withdrawals.
For example, John, age 75, must take a $15,000 RMD. He withdraws $15,000 in January as a normal distribution, which creates taxable income. In November, he learned about QCDs and gave $15,000 to his church directly from his IRA. While generous, his QCD won’t reduce his 2025 taxes since the earlier withdrawal already satisfied his RMD.
This means it’s crucial to encourage donors to make their QCD ideally early in the year.
Qualified Charitable Distributions can only come from certain types of retirement accounts. The most common are traditional IRAs, along with inherited IRAs and inactive SEP or SIMPLE IRAs.
However, not every account qualifies. QCDs can’t be made directly from 401(k), 403(b), or 457 plans. If someone wants to give from one of those accounts, they’d need to roll those funds into a traditional IRA first. The same goes for active SEP or SIMPLE IRAs as those don’t qualify while contributions are still being made.
In short, if the account is an IRA and not actively receiving employer contributions, it’s probably eligible. Everything else needs an extra step.
A successful QCD initiative should be run as an annual system that builds awareness, nurtures trust, and removes friction.
Start by finding out who in your congregation is eligible for Qualified Charitable Distributions (QCDs).
Look through your donor database and filter for members age 73 and older as those required to take Required Minimum Distributions (RMDs). Flag anyone who gives $5,000 or more a year, as well as members who tend to make larger year-end gifts. These patterns often point to donors who are already thinking about tax-smart giving.
Next, assign an Executive Pastor, CFO, or Financial Secretary to manage communication and follow-up. This helps ensure donors get clear, consistent information rather than mixed messages from multiple people.
Pro Tip: Don’t assume only wealthy members have IRAs. Many longtime, faithful givers have significant retirement accounts they’d love to use for kingdom impact. They just need someone to explain how.
Timing is everything with QCDs. The check or transfer must clear by December 31 for it to count toward current year’s taxes. That means your communication plan should start early in the fall and build urgency as the year ends.
Across all of your communication, you should repeat these three points:
Here’s a simple comms rhythm that works:
Once donors are ready to give, your job is to make the process simple and stress-free. This means posting your church’s key information clearly online and in printed materials, including:
Then, give donors easy-to-follow instructions, such as:
When the check arrives, send a thank-you letter within 48 hours. It can be as simple as,
“We gratefully acknowledge receipt of your Qualified Charitable Distribution from [Custodian Name] on [Date]. No goods or services were provided in exchange for this gift.”
Finally, if you’re using Subsplash Giving, you can make the entire process even smoother. Create digital forms to capture QCD intent, track pledges, send thank-you messages, and integrate everything into your existing reports.
The less friction you create, the more likely donors are to follow through and the more your church benefits from this powerful, tax-free giving opportunity.
QCDs are one of the simplest and most underused giving tools available to churches today.
With a repeatable system to identify, educate, and facilitate these gifts, your ministry can unlock a new stream of consistent, high-impact giving each year-end.
And platforms like Subsplash make this easy. Subsplash helps churches make giving easier from recurring tithes to non-cash gifts, Donor Advised Funds, and QCDs.
With a single platform that brings together websites, mobile apps, live streaming, digital giving, church management, and messaging, Subsplash gives your team one central place to manage every form of generosity with clarity and confidence.
If you’re ready to see how Subsplash can strengthen all your giving channels from everyday mobile donations to more advanced planned gifts, [.blog-contact-cta]book your demo here [.blog-contact-cta].
Q: What accounts qualify for QCDs?
QCDs can only be made from IRAs. That includes traditional IRAs, inherited IRAs, and inactive SEP or SIMPLE IRAs.
Accounts like 401(k)s, 403(b)s, and 457 plans don’t qualify directly. If a donor wants to give from one of those accounts, they first have to roll the funds into a traditional IRA. Active SEP and SIMPLE IRAs are also off-limits while contributions are still being made into them.
Q: Can someone make a QCD before they’re required to take RMDs?
Yes. Donors can start making QCDs at age 70½, even though RMDs don’t begin until age 73.
For donors in that 70½–72 window, QCDs still offer real benefits. The gift remains completely tax-free, it helps shrink the future IRA balance, which reduces future required withdrawals, and it establishes a pattern of intentional, tax-smart giving before RMDs kick in.
Q: Is a QCD tax-deductible?
Not in the traditional sense and that’s exactly why QCDs are so powerful.
A QCD isn’t a deduction; it’s an exclusion from income. The money never shows up as taxable income in the first place, which is often more advantageous than taking a deduction.
This matters because it still works for donors who take the standard deduction. It keeps their adjusted gross income lower, which can reduce Medicare premiums, minimize the tax on Social Security benefits, and help them avoid the 3.8 percent net investment income tax.
Donors can’t claim a charitable deduction on top of the QCD, but they don’t need to. The tax benefit is already baked in.
Q: What if a donor already took their RMD this year?
If a donor has already taken their full RMD as a regular withdrawal, that amount is now taxable income. A QCD can’t retroactively fix it, and the tax bill can’t be undone.
They can still make a QCD for additional giving, which is up to the annual limit of $108,000, but it won’t offset the earlier taxable withdrawal. The key lesson is timing: the QCD needs to happen before any other IRA distributions are taken.
Q: How should the church document a QCD?
Your part is simple. Send a written acknowledgement for the gift that includes the donor’s name, the amount, the date the church received it, and a standard statement confirming that no goods or services were provided in exchange for the contribution.
Do not label the gift as “tax-deductible.” The donor handles the tax reporting on their end, and the exclusion is applied when they file their return, not by the church.
Your job is to acknowledge the gift clearly and promptly. The donor and their custodian handle the rest.
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