Tax filing season is in full swing, and many people are paying closer attention to income, deductions, and their overall tax picture. It’s also a great time to revisit tax planning strategies that can improve your financial plan over the long term. One strategy that frequently gets overlooked is the Qualified Charitable Distribution, commonly referred to as a QCD. When it comes to taxes, small planning decisions can make a meaningful difference.

For clients who are already charitably inclined, QCDs can be a tax-efficient way to give.

What Is a Qualified Charitable Distribution?

A Qualified Charitable Distribution allows you to transfer money directly from your IRA to a qualified 501(c)(3) charity.

If done properly:

• The amount given counts toward your Required Minimum Distribution (RMD).
• The distribution is excluded from your taxable income.
• You do not have to itemize deductions to receive the tax benefit.
• In simple terms, the gift can satisfy part or all of your RMD without increasing your taxable income.

Who Is Eligible?

To make a QCD:

• You must be age 70½ or older.
• The funds must come from an IRA (not a 401(k) unless it has been rolled into an IRA).
• The distribution must go directly from the IRA custodian to a qualified 501(c)(3) organization.
• The check must be made payable to the charity, not to you personally.

Why Is It So Effective?

Here’s why:

• The distribution does not show up in your taxable income, possibly reducing income taxes
• The distribution also does not show up in your adjusted gross income (AGI).
• A lower AGI can reduce the taxation of Social Security benefits.
• It may help lower Medicare premiums by potentially reducing your exposure to Income-Related Monthly Adjustment Amount (IRMAA) surcharges.
• It reduces the size of your IRA, which can lower future RMDs.

Timing Matters

One common mistake is waiting until late December to make the gifts. The check must be deposited by the charity by December 31st for it to count for that tax year. Waiting too long can create unnecessary stress or missed opportunities.

It’s Easier Than You Think

Most custodians make the process straightforward. You simply request a Qualified Charitable Distribution, specify the charity, and have the check mailed directly to the charity or to you then you can deliver to the charity. In either case the check must be made payable to the charity.

Most custodians also have the option to issue a checkbook on an IRA which allows you to write the check and deliver it to the charity.

In either case be sure to maintain the gift receipt provided by the charitable organization. You will need these should you ever get audited by the Internal Revenue Service (IRS).

Final Thoughts

If you are already giving to charity and over age 70½, this is one of the rare instances where getting older actually works in your favor. Talk with your advisor now and begin the process to obtain a checkbook on your IRA.

As with many financial decisions, the key is not complexity it’s intention. If charitable giving is part of your plan, it makes sense to give in the most tax-efficient way possible.

Before joining the firm in 2010, William served as Chairman, President and COO of Arlington Trust Company, Inc. and was a partner in the family office firm of Arlington Partners LLC. He holds a B.S. in finance and accounting from Birmingham-Southern College. Previously, he was a partner in the CPA firm of Williams, Taylor & Associates P.C. (currently Forvis). William received his CPA designation in 1993 and is a member of the AICPA and the ASCPA. He earned his CERTIFIED FINANCIAL PLANNER™ designation in 1999. William serves on the Birmingham-Southern Norton Board. He is active in St. Luke’s Episcopal Church and the Kiwanis Club of Birmingham, and he enjoys traveling, snow skiing and other outdoor activities with his family.

Helen joined the Leavell team in 2024 after seven years in Memphis, Tennessee, where she worked for LoneTree Wealth Management and Southeastern Asset Management.

Originally from Mobile, Alabama, Helen earned her bachelor of science in commerce and business administration from The University of Alabama. Helen enjoys art, playing tennis, and taking her dog to the park outside of work.

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At Leavell, we believe exceptional financial guidance begins with a collaborative approach. Every client is supported by a dedicated team that ensures personalized, comprehensive, and responsive service.

Each client team includes:

• Investment Counselor – Your primary advisor, focused on understanding your financial goals, risk tolerance, and long-term objectives. The Investment Counselor designs a customized investment strategy and holistic financial plan tailored to your unique needs.
• Portfolio Manager – Responsible for executing your investment strategy. The Portfolio Manager makes investment decisions, actively monitors market conditions, and adjusts portfolios to stay aligned with your goals.
• Client Service Representative – Delivers attentive, high-touch service. From account setup and document management to money movement and ongoing inquiries, your Client Service Representative ensures every detail is handled with care.

This team-based structure enables Leavell to provide well-rounded support and long-lasting client relationships built on trust, expertise, and continuity.

Important Disclosures: The statements and opinions expressed in this article are those of the authors as of the date of the article, are subject to rapid change as economic and market conditions dictate, and do not necessarily represent the views of Leavell Investment Management, Inc. This article does not constitute investment advice, is not predictive of future performance, and should not be construed as an offer to sell or a solicitation to buy any security or make an offer where otherwise unlawful. Investing in securities carries risk including the possible loss of principal. Individual circumstances vary. Past performance is no guarantee of future results.