QCD or DAF: Two Ways to Give From Retirement Savings

What is the difference between a QCD and a DAF?

A qualified charitable distribution, or QCD, moves money from your IRA straight to a charity, and the amount may be nontaxable. A donor-advised fund, or DAF, is a giving account you fund now and grant from later. A QCD uses retirement money. A DAF can hold cash or other assets.

This post is general education. It is not tax or legal advice. Ask your CPA or attorney before you act.

How does a qualified charitable distribution work?

The IRS says a QCD “is generally a nontaxable distribution made directly by the trustee of your IRA (other than an ongoing SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions.” You never touch the money. Your custodian sends it to the church or ministry.

Three rules matter most:

1. Age. The IRS says you must be at least age 70½ when the distribution is made.
2. Limit. In IRS Publication 526 for 2025, your total QCDs for the year can’t be more than $108,000. Check the current figure for the year you give.
3. No deduction. The IRS says that “if the QCD is nontaxable, you can’t claim it as a charitable contribution deduction.”

Our qualified charitable distribution glossary entry and the full QCD guide cover the details.

How does a donor-advised fund work?

With a donor-advised fund, you give to a sponsoring charity, then recommend grants to churches and ministries over time. The gift happens first. The grants come later.

The IRS says you “can only deduct charitable contributions if you itemize deductions on Schedule A.” So a DAF gift helps your taxes only if you itemize. Many families who give a lot in one year, and little in others, gather several years of gifts into one year to cross the line. That idea is called bunching charitable deductions. Our guide to donor-advised funds for Christian givers explains the steps.

Rules on what a DAF can hold and how it is funded vary by sponsor. Ask the sponsor and your CPA.

Which one fits which situation?

Neither tool is better in every case. Think about the goal, the account that holds the money and your age.

Why does the RMD matter here?

The IRS says you “generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 73.” Those withdrawals are called required minimum distributions.

Because “a QCD will count towards your required minimum distribution,” some families send part of the RMD directly to their church. That keeps the amount out of their income. They may give up the deduction, but they also avoid the extra income. Which path costs less depends on your tax picture. Ask your CPA to compare. Our post on RMD age and your giving walks through the timing.

Can I use both?

Yes. Many families do. They might use a QCD for steady gifts to their home church each year and a DAF for a larger gift they want to spread across ministries. They might give appreciated shares to the DAF in a year when they itemize. See our post on whether to gift appreciated stock or sell first.

Do not assume a QCD can go to a donor-advised fund or to any charity you name. Confirm that the recipient qualifies before you instruct your custodian.

What are common mistakes?

A few errors come up often, and each is easy to avoid.

• Writing a check from your own account and calling it a QCD. The IRS describes a QCD as a distribution made directly by the trustee of your IRA. Money that lands in your bank account first is a normal withdrawal.
• Waiting until late December. Custodians need time to send checks or wire funds. Start in the fall.
• Forgetting the acknowledgment. Ask the charity for a written receipt for every gift, and keep it with your tax records.
• Counting on a deduction. A QCD and a deduction for the same dollars do not go together, according to the IRS.
• Using the wrong account. The IRS text we read excludes an ongoing SEP or SIMPLE IRA. Ask your custodian what your account allows.

What should I ask before I give?

• How old am I, and has my IRA custodian processed QCDs before?
• What is the current QCD limit?
• Do I itemize this year, or could I bunch my giving?
• Which account is the best source for this gift?
• How does the gift change my taxable income?
• Is the charity qualified to receive it?
• Does my giving plan match what I feel called to do?

Giving starts with what you feel called to give. The tool comes second.

Next step

Our charitable giving strategy page shows how Seek First plans giving alongside taxes and retirement. If you want to talk through QCDs and donor-advised funds for your family, schedule a free call for a 20-minute complimentary consultation, or call (866) 398-4044.