Apples and Oranges: Two Ways to Give Through Your IRA

When it comes to charitable giving, your retirement accounts may offer more opportunities than you realize.

If you've spent years building your retirement savings, you've likely thought about how those assets will support you and your family in the future. But have you considered how they might also support the organizations and causes you care about?

There are two distinct ways retirement assets can play a role in your charitable plans. One allows eligible donors to make charitable gifts during their lifetime. The other provides an opportunity to leave a charitable gift through a beneficiary designation.

Think of them as apples and oranges. Both involve retirement assets and charitable giving, but they work differently, have different requirements, and can serve different purposes.

Understanding the distinction can help you explore how your retirement assets might make a difference today and for generations to come.

Opportunity #1: Giving from your IRA during your lifetime

If you're age 70½ or older, you may be eligible to make a Qualified Charitable Distribution (QCD) directly from your IRA to an eligible charitable organization.

A QCD allows you to use a portion of your IRA to support a cause you care about while potentially receiving tax benefits.

For 2026, eligible individuals can make up to $111,000 in QCDs from their IRAs. A qualifying distribution is generally excluded from taxable income rather than claimed as a charitable income tax deduction.

And if you're already taking Required Minimum Distributions (RMDs), a qualifying QCD can count toward that requirement.

One important distinction: You don't have to wait until you're required to take RMDs to consider a QCD. Eligibility for QCDs begins at age 70½, while RMDs generally begin at age 73 or 75, depending on your birth year.

There are also rules about how the gift must be made. A QCD generally must go directly from your IRA to an eligible charitable organization. Under current law, donor-advised funds cannot receive QCDs, although certain other types of charitable funds at GMCF may be eligible.

If you're considering a QCD, it's important to work with your financial or tax advisor before making the distribution.

Opportunity #2: Including retirement assets in your charitable legacy

Your retirement accounts can also help you make a difference beyond your lifetime.

One way to do this is by naming a charitable organization as a beneficiary of an IRA or other eligible retirement account, such as a 401(k) or 403(b).

You may choose to leave all or a percentage of the remaining assets to a nonprofit, a charitable fund at GMCF, or another eligible charitable beneficiary.

Unlike QCDs, there is no age-70½ requirement for naming a charitable beneficiary. This is an opportunity you can explore as part of your estate planning at many different stages of life.

Retirement assets can be particularly useful for charitable legacy planning because traditional retirement accounts left to individual beneficiaries may carry income tax consequences. Tax-exempt charitable organizations generally do not pay federal income tax on retirement assets they receive for charitable purposes.

Depending on your account, establishing a charitable beneficiary may be as simple as updating a beneficiary designation. However, it's important to coordinate those decisions with your overall estate plan and your legal, tax, and financial advisors.

You don't have to choose one or the other.

Here's something many donors don't realize: These two opportunities are separate, and you may be able to use both.

For example, you might make annual QCD gifts from your IRA to support your favorite nonprofit during retirement while also naming that organization as a beneficiary of your remaining IRA assets.

Or perhaps you're not yet eligible to make QCDs but would like to include charitable giving in your long-term plans. You can still explore naming a nonprofit as a beneficiary of a retirement account.

Your giving decisions can also change over time. As your financial circumstances, family priorities and charitable interests evolve, you can revisit how your retirement assets fit into your plans.

The important thing is understanding that your retirement accounts may offer more than one way to support what matters to you.

Start with two questions.

As you consider your charitable giving and financial plans, ask yourself:

1. Could my IRA help support the causes I care about today?

If you're age 70½ or older, a QCD may be worth discussing with your advisors.

2. Could my retirement assets help support those same causes in the future?

A charitable beneficiary designation may provide an opportunity to continue supporting an organization or community beyond your lifetime.

You don't need to have all the answers before beginning the conversation.

Connecting your generosity with what matters most

At the Greater Manhattan Community Foundation, we believe charitable giving begins with understanding what matters to you.

Whether you're interested in supporting a favorite nonprofit today, creating a lasting charitable legacy, or exploring how retirement assets could fit into your giving plans, our team can help you understand the options available.

We work alongside donors and their professional advisors to connect charitable intentions with opportunities that strengthen our communities.

Your retirement assets are part of the future you've planned for yourself. They may also be part of the future you help create for others.

Contact the GMCF team to explore how your charitable giving can support the organizations and causes you care about, today and for generations to come.

This article is provided for educational purposes and is not intended as tax, legal or financial advice. Please consult your professional advisors regarding your individual circumstances.