QCD Update for 2026 - Advice You Should Know

In this episode of Protecting and Preserving Wealth, we dive into key updates around Qualified Charitable Distributions (QCDs) for 2026. QCDs allow individuals age 70½ and older to make direct charitable donations from their IRA accounts, and this episode is especially relevant for clients looking to manage taxes effectively while giving charitably.

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We begin by clarifying the age requirement. You must be exactly 70½ to make a QCD — not before, not even within the same tax year if you haven't reached that age yet. This often confuses clients, especially early in the year when they expect eligibility based solely on the calendar year. Importantly, you don’t need to be taking Required Minimum Distributions (RMDs) to utilize QCDs. Even if RMDs don’t kick in until 73 or 75, you can still make a QCD at 70½.

Another common question we addressed is whether inherited IRA beneficiaries can make QCDs. The answer is yes — as long as they are 70½. A QCD can satisfy RMDs from an inherited IRA, but the age rule still applies. For 2026, the annual QCD limit is $111,000 per person, meaning couples could potentially give up to $222,000.

We also discuss the mechanics. The distribution must be made directly from your IRA to the charity. You can’t take the money into your personal account and then donate it — doing so disqualifies the distribution from being a QCD. Additionally, you cannot direct a QCD to a donor-advised fund or receive any benefit (like a charity dinner ticket) in return. The transaction must be completely tax-neutral — for both you and the charity.

We emphasize that QCDs must be made in cash; donations in-kind (like appreciated stock) from an IRA don’t qualify. We caution against using Roth IRAs for QCDs due to complexity and potential tax consequences. Traditional IRAs are the cleanest route.

Jason outlines several strategic reasons to use QCDs: reducing taxable income to protect Social Security benefits, avoiding IRMAA surcharges on Medicare, qualifying for the new 2026 senior deduction (between $150,000–$250,000 AGI), and preserving room for Roth conversions. These moves can result in substantial long-term tax savings.

Lastly, Alex explains a new IRS reporting feature: a “Code Y” in Box 7 of the 1099-R to identify QCDs. While optional for custodians in 2025, it becomes more prominent in 2026.

It’s a helpful safeguard to ensure QCDs are properly reported as non-taxable — but documentation remains critical.

⏱️ Chapters & Timestamps
(00:00) – Introduction
(00:36) – Who qualifies for QCDs?
(01:34) – QCDs for inherited IRAs
(02:21) – Why timing matters: turning 70½
(03:43) – Tax advantages of QCDs
(04:21) – How to properly execute a QCD
(05:13) – Limits and benefits for married couples
(05:42) – 401(k) rollover considerations
(06:19) – No donor-advised funds or benefits allowed
(07:40) – QCDs must be in cash, not stock
(08:50) – Strategic tax benefits of QCDs
(10:46) – New IRS Code Y on 1099-R forms
(12:10) – Contact info and final thoughts

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit us online at https://www.hoslerwm.com/

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