Dear Liz: Please address recent inquiries regarding how to make a qualified charity distribution from an IRA using a debit card.
Some large mutual fund companies inform their customers that checks drawn from IRA accounts for charitable donations qualify as QCDs. So, whether you use a check or a debit card, it seems like they serve the same purpose.
Still, your response to a reader suggests something different.
Answer: You’re right; I didn’t fully elaborate on the issue.
The initial letter writer believed that using a debit card could facilitate charitable contributions to small arts organizations accepting online payments from her IRAs, but it definitely wasn’t just about using a paper check. A qualified charity distribution allows individuals to give directly from their IRA to a charity without incurring taxes on those funds.
Typically, IRA custodians don’t provide debit cards, meaning that donors first need to transfer their donation to a bank account or other account that does offer such a card. Qualified charity distributions must be sent directly to the charity; they can’t pass through the account holders.
A check drawn from an IRA account, whether created by the account holder or IRA custodian, can be classified as a qualified charity distribution, assuming all other requirements are satisfied. For instance, the donations must originate from a traditional IRA, account holders need to be at least 70½ years old, and in 2025, the annual contribution limits are set at $108,000.
On another note, sending a check electronically poses its own risks. There’s been a noticeable increase in check fraud tied to email theft. Using electronic payments is generally a safer option, whether for paying bills or making charitable donations.
If you must send a check, consider using a gel pen, as it’s more difficult to alter the ink. Also, it’s better to go to your local post office rather than leaving your check in an unsecured mailbox. Keep an eye on any checks you send, and report any missing ones to your bank or IRA custodian quickly to prevent unauthorized payments.
Liz Weston, a certified financial planner, writes a personal finance column. Questions can be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or through the Contact form on AskLizWeston.com.
