Last updated: October 2026
Charitable planning with retirement accounts takes two main forms. While you are alive and at least 70½, you can make a qualified charitable distribution directly from your IRA to a charity, and it can count toward your required minimum distribution. At death, you can name a charity or a charitable remainder trust as beneficiary of an IRA or retirement plan. California follows the federal rule for these distributions. Bay Legal drafts the beneficiary and trust documents, and your CPA advises on the tax effects.
Qualified charitable distribution (QCD): a transfer made directly from an IRA to an eligible charity by an owner aged 70½ or older.
Retirement-account gifts are one of several tools covered on our charitable estate planning page.
What is a qualified charitable distribution?
- Age. You must be at least 70½ on the date of the distribution (IRC section 408(d)(8)).
- Direct transfer. The IRA custodian must send the money directly to the charity.
- Eligible charities. Public charities qualify. Donor-advised funds and supporting organizations do not.
- Annual limit. Up to $111,000 per person in 2026, adjusted each year for inflation (IRS Notice 2025-67).
- Required minimum distributions. A QCD counts toward the year’s required distribution.
- California. California follows the federal rule, so a QCD is excluded for California income tax as well (FTB summary of federal changes).
What is the one-time QCD to a charitable trust or gift annuity?
Once in your lifetime, you can direct a QCD to a charitable remainder annuity trust, a charitable remainder unitrust or a charitable gift annuity, up to $55,000 in 2026 (IRS Notice 2025-67). The trust or annuity must be funded only with QCDs, and payments can go only to you, your spouse or both. A gift annuity must begin fixed payments of at least 5% within one year.
Why leave a retirement account to charity at death?
Money left in a traditional IRA or 401(k) is income in respect of a decedent: whoever receives it pays income tax on it as it is withdrawn (IRC section 691). A charity is tax-exempt, and so is a charitable remainder trust (section 664(c)). Many plans therefore leave retirement accounts to charity and other assets to family.
| Beneficiary | Income tax on what it receives | Timing |
|---|---|---|
| Child or other individual | Taxed as withdrawn | Generally must empty the account within 10 years |
| Surviving spouse | Taxed as withdrawn | Special spousal options as an eligible designated beneficiary |
| Charity | None | Receives the full amount |
| Charitable remainder trust | None at the trust level; payments taxed to the trust’s beneficiaries | Pays family for life or up to 20 years, then charity |
How does the 10-year rule affect charitable planning?
Most beneficiaries other than a spouse, a minor child, a disabled or chronically ill person, or someone no more than 10 years younger than the owner must empty an inherited account within 10 years (IRC section 401(a)(9)). If the owner died on or after their required beginning date, those beneficiaries must also take annual distributions in the meantime (Treas. Reg. section 1.401(a)(9)-5(9)-5)). A charitable remainder trust named as beneficiary can take the account at once without income tax and pay family over a lifetime, replacing the longer payout the 10-year rule ended.
Does my spouse have to consent?
Often, yes. In California, naming a charity on an account that holds community property is not effective as to your spouse’s half unless your spouse consents in writing (Probate Code section 5020). The consent can be revoked during the marriage but becomes irrevocable at either spouse’s death (section 5030). For 401(k) and other employer plans governed by federal law, the spouse’s written consent must be witnessed by a notary or a plan representative (IRC section 417), and federal rules control over California’s.
How do I set up a charitable gift from a retirement account?
- List your accounts. Note each IRA and employer plan, its custodian and its current beneficiaries.
- Check community property and consent. Decide whether your spouse needs to sign a consent.
- Choose the beneficiary. A charity, a charitable remainder trust, family members, or a split among them.
- Draft any trust. If you use a charitable remainder trust, it must be in place before you name it.
- Update the custodian’s forms. Beneficiary designations control over your will, so file new forms with each custodian.
- Coordinate with your plan. Make sure your will or living trust does not duplicate or contradict the designations.
Frequently Asked Questions
Can I make a qualified charitable distribution to my donor-advised fund?
No. Under IRC section 408(d)(8), a qualified charitable distribution must go to a public charity, and donor-advised funds and supporting organizations are excluded. You can still recommend grants from a donor-advised fund using other money. Ask your IRA custodian to confirm the recipient’s status before transferring.
Does California tax qualified charitable distributions?
No. The Franchise Tax Board states that California automatically conforms to the federal IRA rules in IRC section 408, including the qualified charitable distribution exclusion and the SECURE 2.0 changes. A QCD that is excluded for federal tax is also excluded for California income tax. Some older sources say otherwise; the FTB statement controls.
Can I name a charitable remainder trust as my IRA beneficiary?
Yes. A charitable remainder trust is exempt from income tax, so it can take the whole account at once without tax and then pay your family for life or up to 20 years before charity receives the rest. It will not qualify as a see-through trust, but that usually does not matter because the trust itself pays no tax.
Related Questions
What is income in respect of a decedent?
It is income the decedent earned or was owed but had not yet been taxed on, such as a traditional IRA balance. Under IRC section 691, it is taxed to whoever receives it.
When do required minimum distributions start?
Age 73 for people who reach 72 after 2022 and 73 before 2033. For people who reach 74 after 2032, the age is 75. QCDs can count toward these distributions.
Does my will control who gets my IRA?
No. A beneficiary designation is a nonprobate transfer that passes outside your will under Probate Code section 5000, so the form on file with the custodian generally controls. Review designations whenever you update your will or trust.
About the attorney
Sivendra Ganesh Maraj handles estate planning at Bay Legal, including beneficiary designations, charitable remainder trusts and the coordination of retirement accounts with a client’s trust. Sivendra works with clients’ CPAs and financial advisers so the documents and the tax planning fit together. Charitable planning is part of Bay Legal’s estate planning practice.
Talk to a California estate planning attorney about retirement-account gifts
If you want retirement savings to benefit charity, gather your account statements and current beneficiary forms, and ask your CPA about QCDs for this year. To discuss beneficiary planning or a charitable trust, call the office nearest you or email intake.
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This page is general information about California law and does not constitute legal advice or create an attorney-client relationship. For advice on your specific situation, contact a licensed California attorney.