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QCD after the SECURE Act


We’ve been reviewing the changes that the SECURE Act (Setting Every Community Up for Retirement Enhancement) has brought about. We’ve covered RMDs (just the regular kind), student loans, and contributions. Now we’ll talk about QCD – Qualified Charitable Distributions. We’ll also cover the new anti-abuse rule as well.

The original rules for QCD are that if you are over age 70½ years old (subject to RMDs under the pre-SECURE rules), you can make a direct distribution to a charitable organization from your IRA. (Only IRAs are allowed to make QCD distributions – h/t to reader Ritch!) By qualifying this direct distribution as a QCD, you do not have to include the amount of the distribution as income on your tax return. (For more on tax treatment and why this is a big deal, see this article about QCDs.)

After the SECURE Act passed, QCD now has a few differences.

First of all, even though SECURE changed the RMD age to 72, you are still allowed to make QCD distributions beginning when you reach 70½. That’s a slight departure from the old rule, which indicated that you had to be subject to RMD before you could make a QCD. Now you can make a QCD at any age after 70½, even though you may not be subject to RMD until age 72.

The other difference is more important, however: Since SECURE also made a change to the contribution rules, by allowing contributions to be made at any age (previously not allowed after 70½), there’s an anomaly that the rules address. This new rule is called the QCD anti-abuse rule, and it does exactly what you’d think, given the name.

If there wasn’t an anti-abuse rule in place, you could make a contribution to your IRA (if you have earnings) and then immediately withdraw it as a QCD. This would result in you taking a double-dip of tax preferences for that particular money.

For example, let’s say you’re single, 71 years old, and you have total income (before any dealings with your IRA) of $50,000. You make a regular, deductible contribution of $7,000 to your IRA, bringing your adjusted gross income down to $43,000. You then also direct the IRA custodian to distribute $7,000 to your favorite charity as a QCD. Since QCD distributions aren’t included as income, your adjusted gross income remains at $43,000.

But since you made a deductible contribution and a QCD, you’re getting twice the tax benefit from this activity. Enter the QCD anti-abuse rule.

With the QCD anti-abuse rule, when you make a QCD distribution, you must include in income any post-age-70½ deducted contributions to your IRA. Once the amount of your post-age-70½ deducted contributions is met with attempted QCDs, you will be eligible to have any excess amount treated as QCD, not included in taxable income.

Back to our example, let’s say at 71 you’re making the deductible contribution to your IRA, and you made a similar deductible contribution to your IRA in the previous year, when you had reached 70½. So you’ve made total deductible contributions to the IRA in the amount of $14,000.

Now you decide to make a QCD to your favorite charity, in the amount of $20,000. You are only allowed to bypass your tax return with $6,000 of the QCD distribution, since you had $14,000 of deducted IRA contributions after age 70½. So your income for that year, although you originally reduced it by $7,000 for the deductible IRA contribution, is now increased by $14,000 due to the disallowed portion of your QCD. The remaining $6,000 is still allowed as a QCD.

You can still itemize that $14,000 contribution to charity. Since (for 2020) the standard deduction for someone in your position (single and over age 65) is $13,700, you will get the full benefit of that itemized deduction, along with your other itemized deductions.

In order for this to work properly, if you’ve made deductible contributions after age 70½, you still need to attempt to make the QCD as if you had not made deductible contributions after age 70½. That is, ask your custodian to send the funds directly to the qualified charity, just the same for any QCD. Otherwise, if you bypass the QCD process and take a distribution in your own name, followed by a contribution to the charity, you won’t be able to eliminate that amount from your previously-deducted amounts.

From our prior example, if you had made $14,000 of deductible contributions to your IRA after age 70½ and later wanted to make a $5,000 contribution from your charity, you might think it’s fruitless to follow the QCD process since that amount is going to be considered a regular distribution (and therefore taxable) anyway. But if you don’t follow the QCD rules and attempt to make this $5,000 distribution a QCD, then you’ll still have a $14,000 balance in your deductions that will continue to work against your future potential QCDs. However, if you pass this $5,000 distribution through the QCD process, you’ll reduce your future deductible contribution figure for the anti-abuse rules to $9,000. Eventually, if you continue the QCD process in future years you’ll eliminate the deductible contributions balance and be able to make a successful QCD.

Just keep in mind that the post-age-70½ deducted contributions to IRAs will follow you for the rest of your life, or at least until you’ve made enough attempted QCD distributions to use up your deducted contributions from earlier. Say you waited until you were 80 years old to make a QCD – you’ll need to go back and add up all of your deducted IRA contributions from 70½ onward to this year, and subtract those deducted contributions before the QCD will be allowed the special tax treatment.

It may work out better in the long run if you were to make those IRA contributions as non-deductible, depending on your circumstances. You’ll want to run the numbers and maybe talk to your tax professional to decide which direction makes most sense for you.


  1. Glenn Rohrbach says:

    Your article and responses are most helpful.
    My question on this concerns contributions to a SEPIRA for a sole proprietor, owner only contributing. Do contributions to the SEPIRA under the new rules reduce QDCs made from his/her other IRA accounts? Thank Glenn

    1. jblankenship says:

      SEP and SIMPLE IRA contributions are not included in the QCD anti-abuse rules, only traditional IRA contributions are considered.

      1. Glenn Rohrbach says:

        Thanks. I thought so from a number of sources but none had a difinative yes or no answer. It will be interesting how tax software programs deal with the new rules. Again thanks!

        1. jblankenship says:

          Yes, this certainly complicates matters a bit – but then again, what do we expect? :)

  2. Ritch says:

    Here’s my question related to QCD’s and the Retirement Saver’s Credit. Do you know if QCD’s have to be included in Box 4 on Form 8880 when determining eligibility for, and calculating the amount of, any Credit for Qualified Retirement Savings Contributions?

    The Form 8880 Instructions don’t specifically address this issue. They say you DO need to include “the total amount of distributions you and your spouse (if filing jointly) ‘received’ from Traditional or Roth IRA accounts” (even though Roth IRA distributions are tax free), with certain exceptions.

    They then list several exceptions describing various retirement plan distributions that DON’T have to be shown on Line 4, but the Instructions do NOT specifically refer to Qualified Charitable Distributions. The closest exception they mention, IMO, is for a Rollover or a Trustee to Trustee Transfer.

    With QCD’s, the taxpayer and/or his/her spouse doesn’t actually ‘receive’ the funds, which is quite similar in nature to a Rollover or a Trustee to Trustee Transfer, where they don’t ‘receive’ money to spend. However, with a QCD, the taxpayer and/or his/her spouse does ‘receive’ a tax benefit, in that they’re removing funds from their taxable Traditional IRA account and distributing them to a/the qualified charity without having to include the withdrawn funds they distributed as income subject to taxation on their Federal tax return.

    I’d appreciate your opinion on this issue. I haven’t been able to locate any really definitive guidance that settles the matter, so I thought you might be able to shed some light on whether QCD’s do or don’t have to been included as a “distribution” on Line 4 on Form 8880.

    In the example I gave of Joe and Flo, assume Joe and Flo’s combined taxable wages for 2019 are 33,900, with 100 of taxable interest income and 21,600 of gross Social Security Benefits for Joe (6,680 of which would be taxable). Their AGI would then be 40,680, before any adjustments. Their Standard Deduction is 25,700 (Joe is 65+ but Flo is “only” 62), giving them a Taxable Income of 14,980 and a Tax, before any Credits, of 1,498. Assuming Joe contributed $2,500 to his pre-tax 401k (a slightly different number [+100] than what I used in the earlier example) and Flo contributed 1,700 to her pre-tax 401k, then with an AGI of 40,680 they would qualify for a Form 8880 Credit of 740 (assuming no distributions for 2017-2019 that have to be listed on line 4 of the Form 8880.)

    Their savvy Tax Preparer and Advisor, let’s call him Mr. Jim Blankenship, suggests they might want to have Flo add another 1,300 to her Traditional IRA account and designate it as a 2019 Tax Year Contribution. By doing that, their taxable SSB’s would drop to 5,750 and their AGI would decrease to 38,450. Their “new” taxable income is 12,750, their income tax calculates out to be 1,278, but their Form 8880 Credit increases to 1,278, wiping out ALL their 2019 Federal and State Income Tax Liability.

    And that’s when Joe tells Jim that instead of deferring his first RMD of 3,000 to 2020 as they had originally planned, he and Flo had their IRA Custodian do a 3,000 QCD in early December (several months AFTER Joe turned 70 1/2) to their designated qualified charity “because the organization needed the money before the end of the year.”

    To which Jim then says either “No worries, that’s not going to change your 2019 tax liability” or, “You know, Joe, I really wish you would have called and talked to me about that before deciding to deviate from our previous plan, because it really does impact your 2019 numbers.”

    You can write the rest of the script from here. Thanks for entertaining the question.

    1. jblankenship says:

      A QCD is a completed distribution, even though it’s not taxable. In my opinion this would be accounted for on the 8880, reducing the available saver’s credit.

      1. Ritch says:

        I greatly appreciate your opinion. That’s the same conclusion I reached based on everything I’ve been able to find and read (which frankly isn’t a lot when it comes to the Retirement Saver’s Credit and QCD’s, which is why I raised the question).

        In the last example I presented the QCD completely obliterates the Retirement Saver’s Credit for Joe and Flo. Thankfully, in real life, that hypothetical couple did defer Joe’s initial RMD until the following year (2020), so it didn’t blow up their plan for 2019.

        Thanks very much for weighing in. If you come across any definitive guidance that’s contrary to the conclusion we both reached, I’d appreciate it if you’d send it my way.

        I’m curious to know if the anti-abuse rules for QCD’s and post 70 and 1/2 IRA contributions mention the issue of voluntary employee salary deferrals and contributions after age 70 and 1/2 made to an employer plan (like a 401k or a 403b) that are later rolled over or transferred to a Traditional Rollover IRA, where some of them are subsequently used to fund QCD’s. As far as I know, that’s always been allowed in the past for employees who continued to work (and contribute to their 401k or 403b) after age 70 and 1/2 (and whose Plan didn’t require them to begin withdrawals [including RMD’s] until they retired from that employer.) Sort of a “Backdoor QCD” for folks who continued to work and make contributions after they reached age 70 and 1/2 to an employer plan that was later rolled over or transferred to a Traditional Rollover IRA.

  3. Ritch says:


    Thanks very much for your response. Two quick follow-up questions.

    First, in the example I gave for Joe Taxpayer, do you agree with me that Joe will still be allowed to direct QCD’s from his tax deductible Traditional IRA while also continuing to make AND deduct contributions to his pre-tax Employer Retirement Plan (without any tracking and “offsetting” issues and/or requirements), assuming Joe makes no further contributions to any tax deductible Traditional IRA’s after he reaches age 70 1/2? I’d really appreciate your informed opinion on that specific example. From your previous comment to my initial comment, I’m concluding Joe CAN direct the QCD’s from his IRA while making pre-tax (deductible) contributions to his Employer Plan going forward.

    Second, in the example you mentioned toward the end of your post, wouldn’t it be simpler and much more straightforward for folks over age 70 1/2 (who have earned income and who qualify to make IRA contributions) to direct those contributions to a Roth IRA instead of to a Non-Deductible Traditional IRA (especially if all of their prior contributions to an IRA had been to a Traditional IRA Account – i.e., they don’t already have a Non-Deductible IRA)? Opening a Non-Deductible IRA would seem to further complicate matters by introducing ANOTHER need to track and pro-rate future distributions between their Deductible and Non-Deductible IRA’s if/when funds are withdrawn from the accounts sometime down the road. And this tracking and pro-rating requirement would persist (via the IRS’ lovable 8606 Form) until the accounts were fully distributed.

    One possible mitigating factor might be if making the post 70 1/2 contribution to a tax deductible Traditional IRA would qualify the Taxpayer to take the Retirement Savers Credit and realize a significant Federal Income Tax savings, or possibly reduce his/her AGI below a specified State Filing Threshold Amount that could allow him/her to avoid having to pay ANY State Income Taxes, as is sometimes the case in the state where I live (Virginia).

    Absent substantial tax savings as a result of making a post 70 1/2 tax deductible contribution to a Traditional IRA, it would seem prudent just not to go there if someone plans to make recurring QCD’s, unless I’m missing something else in thinking through the various alternatives.

    Thanks again for your willingness to engage in this discussion. As is frequently the case with income tax planning and execution, there are many angles to consider and much to ponder about what’s the “best” way to do things to bring about a/the desired outcome. And the more things change, the more complicated the rules often become.

    1. jblankenship says:

      On your question #1, only deductible IRA contributions after age 70 1/2 need to be tracked for the purpose of the anti-abuse rule. Continued deducted contributions to a 401(k) or other plan are not counted for this purpose.

      Regarding your second question, yes, a Roth IRA contribution could be just as appropriate as a non-deducted traditional IRA contribution, unless income limits remove the ability to make Roth IRA contributions. I believe the income limit will be an issue in many cases dealing with QCD.

      1. Ritch says:


        Thanks very much for responding to both of my questions. I hadn’t thought about the income limit issue you pointed out, but it certainly would impact any taxpayer whose income exceeds the phase out range for contributing to a Roth IRA.

        I have another question pertaining to the interrelationship between QCD’s and the Retirement Saver’s Credit, but I’m debating about whether to email it to you or post it as a blog comment. I think the question, and your answer, would be of interest to some of your readers. It’s not something I’ve seen addressed by anyone else.


        1. jblankenship says:

          It’s your call – doesn’t matter to me which way you present your question.

  4. Ritch says:


    Good post. Much to ponder here, as is the case with so much of what you write. That’s why I really enjoy reading your blog and learning from your articles.

    In this post you stated: “The original rules for QCD are that if you are over age 70½ years old (subject to RMDs under the pre-SECURE rules), you can make a direct distribution to a charitable organization from your IRA or other qualified plan.” I’m not 100% sure what you mean by “other qualified plan”, but I’m assuming you’re referring to 401k’s, 403b’s, 457’s, etc.

    I may be wrong about this, but it was my understanding that QCD’s could ONLY be done from (Traditional) IRA accounts, not any of the other types of plans I listed above. Could you possibly clarify that issue for me?

    Also, whether that’s true or not, I have a question (and a very specific example) that pertains to another statement you made in the article regarding the anti-abuse rule.

    I get what you’re saying about any individual age 70 1/2 and above having to track and offset (if you will) their tax deductible post 70 1/2 contributions to Traditional IRA accounts against QCD’s distributed after they attain age 70 1/2. That makes sense. But are you also saying (and are you absolutely sure) that they must also track AND offset any post 70 1/2 contributions they make to other qualified plans (like a 401k, 403b, 457, etc.) even if they are NOT able to direct QCD’s from those other qualified plans to qualified charitable organizations?

    For example, let’s say Joe Taxpayer was born on 10-15-1948 and reached age 70 on 10-15-2018 and age 70 1/2 on 4-15-2019, making 2019 the year he would normally take his initial IRA distribution. But Joe (and his wife Flo) decide that he will postpone taking his first distribution (of $3,000) until the 2020 tax year, so as to be able to qualify for the Retirement Saver’s Credit on their 2019 income tax return.

    During 2019 Joe’s IRA account grows by 12.70% (from $79,500 on 12-31-2018 to $89,600 on 12-31-2019), which means his second RMD will be $3,500 ($89,600 divided by 25.6 = $3,500). This RMD must be taken by 12-31-2020, which means he will have to take two two distributions in 2020, with the $3,000 RMD from 2018 having to be withdrawn by 3-31-2020.

    Because Joe and Flo got a late start on saving for retirement, both are still working and are contributing to various retirement plans. They also give $6,000 to $7,000 a year to qualified charitable organizations. Let’s assume that in 2020 they plan to give $6,500. They are going to fund these charitable gifts by designating their two 2020 RMD distributions (for 2018 and 2019) as QCD’s.

    If I understand the anti-abuse rule correctly, Joe could NOT also make a $6,500 contribution in 2020 to a tax deductible IRA account and receive a double benefit for that money. However, based on what you wrote, he could contribute $6,500 to either a Roth IRA (or a non-deductible Traditional IRA).

    But what if Joe contributes to his Employer’s 401k or 457 plan? Let’s say he’s paid twice a month (on the 1st and the 15th of each month), and during 2019 he added $2,400 to his Hybrid 401 and 457 Plan, and in 2020 he is on track to contribute an additional $2,600, all from voluntary salary deferrals that come out of his pay on a pre-tax basis.

    Under the anti-abuse rules, does Joe have to track AND offset (against the QCD’s from his IRA Account) the pre-tax contributions he makes to his Employer’s Hybrid Retirement Savings Plan, even if he CAN’T do QCD’s from this plan AND if he’s NOT required to take RMD’s from the plan as long as he continues to work for his current employer?

    It doesn’t seem either fair or reasonable that he would have to do this, but if I’m correctly following what you wrote, that seems to be a distinct possibility.

    I would greatly appreciate any clarification and/or elaboration you’re able to offer regarding how the rules would apply in this instance.

    Thanks very much for your input, and please keep tackling these thorny subjects in your blog posts.

    1. jblankenship says:

      Thanks for reaching out. You’re absolutely correct, the QCD (and the anti-abuse rules) only apply to IRAs. The contribution tracking only has to be done based on deducted IRA contributions, Roth or non-deducted trad IRA contributions do not apply to the anti-abuse rules. I’ll adjust the article accordingly. I appreciate you taking the time to check my work – I was a bit over-exuberant with the application of the rules, and I only mentioned it at the beginning. Throughout the rest of the article I continually referred only to IRAs.

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