High fives for IRAs, QCDs, and charitable planning

At Kitsap Community Foundation, we're honored to talk with donors and fund holders every single day about their favorite causes and how best to support them, whether through a donor-advised fund, an unrestricted gift to KCF, a legacy gift to particular organizations or to KCF itself, and everything in between.

One of the most common areas of confusion (understandably!) is how to use IRAs and other retirement accounts to further charitable goals. And it's an important topic, because Americans who've been in the workforce for a few decades have watched their 401(k)s, IRAs, and other retirement accounts grow nicely! Retirement accounts are a major asset on many families' balance sheets.

We know how tricky it is to keep track of all the rules, and we're here to work alongside your tax and estate planning advisors to help you build a charitable giving plan that reaches your goals, including ways to use your IRAs and other retirement accounts. Please consider sharing the five points (plus a bonus!) below with your advisors as year-end approaches.

1. Age 70½ is still an important charitable giving milestone.

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

This opportunity begins even though Required Minimum Distributions generally don't begin until later, at age 73 or 75, depending on your birth year. In other words, you don't have to wait until RMDs begin to start using QCDs for your charitable giving.

2. The 2026 QCD limit is $111,000 per taxpayer.

The annual QCD limit is indexed for inflation and is $111,000 in 2026. If you're married and both you and your spouse meet the eligibility requirements and have your own IRAs, each of you has a separate limit.

Unlike a conventional charitable contribution, a QCD generally is excluded from your taxable income rather than claimed as a charitable income tax deduction. And if you're already taking RMDs, a qualifying QCD can count toward your RMD.

This can make a QCD especially attractive if you don't itemize deductions, or if you'd simply like to use a portion of your IRA to support the organizations and causes you care about.

3. Make sure the money travels the right path.

The mechanics matter. To qualify as a QCD, the distribution must be made directly from your IRA to an eligible charitable organization. Generally, you can't withdraw the money yourself, deposit it in your bank account, and then write a check to charity and receive QCD treatment.

There's another important limitation: Under current law, donor-advised funds generally can't receive QCDs. If you have a donor-advised fund at Kitsap Community Foundation, though, don't assume that means we can't help. Other types of funds at KCF may be eligible to receive QCDs.

Please reach out to our team before initiating the transfer. We can work with you and your advisors to determine which options fit your charitable goals. And for a QCD to count toward 2026, it generally needs to leave your IRA by December 31, so don't wait. IRA custodians get busy in December!

4. Keep an eye on Washington, D.C.

QCD rules could become even more flexible! If you enjoy tracking legislation (knowing, of course, that proposed legislation may or may not become law), two bipartisan proposals are worth watching. The Charity Parity Act (H.R. 8783) (Senate version, S. 4511) would allow eligible donors to make QCDs directly from certain employer-sponsored retirement plans, such as 401(k)s and 403(b)s, rather than requiring charitable distributions to come from an eligible IRA. Another bipartisan proposal, the IRA Charitable Rollover Facilitation and Enhancement Act of 2026 (S. 3975), would allow QCDs to donor-advised funds.

Neither proposal is current law, so don't count on these expanded options just yet. But both are worth watching, especially if you have substantial retirement assets or use a donor-advised fund as an important part of your charitable giving.

5. Don't forget about your IRA when you're planning your legacy.

QCDs let you use retirement assets for charitable giving during your lifetime. But there's another opportunity that's easy to overlook: You can name a charitable organization, including your fund at Kitsap Community Foundation or KCF itself, as a beneficiary of an IRA or other retirement account.

Retirement accounts can be especially attractive assets to leave to charity. Traditional retirement assets left to individual heirs may carry income tax consequences, while a tax-exempt charitable organization generally doesn't pay income tax when it receives those assets.

And the process may be surprisingly simple. You may be able to leave all or a percentage of a retirement account to charity just by updating your beneficiary designation, without changing your will or revocable trust. Of course, coordinate any beneficiary designation with your overall estate plan and review it with your legal, tax, and financial advisors.

Thinking about your legacy plan? Your timing is perfect. October 19 to 25 is National Estate Planning Awareness Week, and we're hosting Community Conversations: Estate Planning 101 on Wednesday, October 21, 2:30 to 4:00PM at Kitsap Unitarian Universalist Fellowship in Bremerton. Katrina Pipasts and Matt Tilghman-Havens of Northern Trust are joining me to cover the four documents everyone should have, wills and trusts, tax-smart giving, and how to create your will for free in about 20 minutes. Bring your questions! RSVP at bit.ly/2026-10-estateplan.

And a bonus point: You don't have to figure this out on your own.

Retirement assets sit at the intersection of tax planning, financial planning, estate planning, and charitable giving. That's one reason we love working alongside your professional advisors. Whether you're considering a QCD before year-end, thinking about including charitable giving in your beneficiary designations, or simply wondering whether your retirement assets could help you do more for the causes you care about, please reach out. We're here to help you explore the possibilities.

Thank you for the opportunity to work together!