Fidelity and Schwab Won’t Send a Dollar of Your 401(k) RMD to Charity. The Tax-Free QCD Only Works From an IRA, and the Year You Roll Over to Get It, That Year’s RMD Can’t Move With It

A retiree who writes a check to her church every year learns about qualified charitable distributions and calls her 401(k) provider. She wants this year’s required minimum distribution sent straight to the church, tax-free. The plan might sit at Fidelity or at Charles Schwab (NYSE:SCHW | SCHW Price Prediction), and either way the answer is no. Federal law allows that transfer only from an IRA.

So she rolls the 401(k) into an IRA to qualify. That works for next year. The RMD for the year she rolls over has to stay behind, and it gets taxed as ordinary income whether she gives it away or not.

Why Your 401(k) Can’t Send a Tax-Free Gift to Charity

The QCD comes from Section 408(d)(8) of the Internal Revenue Code. It keeps up to $100,000 a year from your income. The limit is indexed for inflation, and you get the exclusion if the money moves “directly by the trustee” to a qualifying charity. It applies only to distributions from an “individual retirement plan” made after the owner turns age 70½. Ongoing SEP and SIMPLE IRAs are kept out too.

With inflation indexing, the 2026 cap is $111,000 per person, according to the Congressional Research Service, and each spouse gets a separate limit. Per IRS Publication 590-B, a QCD counts toward your required minimum distribution.

The law never mentions 401(k)s, 403(b)s or other workplace plans, so rolling the money into an IRA is the only way to use a QCD.

A $31,373 RMD That Can’t Make the Trip

The rollover hits a wall in Section 402(c)(4)(B). That provision kept out any distribution “required under section 401(a)(9)” from the definition of an eligible rollover distribution. Per Publication 590-B, RMDs aren’t eligible for rollover treatment.

Treasury regulations also treat the first dollars out of a plan in an RMD year as the RMD, so in practice, the plan pays you the full RMD in cash before it rolls over anything.

Take a hypothetical 74-year-old retiree, married and filing jointly. Her 401(k) held $800,000 on December 31, 2025, and she rolls it to an IRA in 2026. The Uniform Lifetime Table divisor at 74 is 25.5, so her 2026 RMD is about $31,373. That money goes to her bank account and shows up as income on her 2026 return. The rest moves to the IRA.

She tries to slip the RMD into the IRA anyway. The IRS treats it as an excess contribution, which owes a 6% tax every year it stays there.

What the Stuck Year Costs in Tax and Medicare Premiums

She gives her church $15,000 a year. If she pays from checking in 2026, the gift only lowers her taxes if the couple itemizes. On the standard deduction, it saves them nothing. Sent as a QCD, the same $15,000 would never have counted as income. In a 22% bracket, that’s $3,300 in federal tax.

Medicare adds to the bill. Income-related surcharges (IRMAA) are based on modified adjusted gross income (MAGI) from two years earlier, so 2026 income sets 2028 premiums. Using 2026’s tiers as a guide, joint filers over $218,000 pay $284.10 a month each for Part B instead of $202.90. Each spouse also pays a $14.50 monthly Part D surcharge. These are cliffs, so $1 over the line triggers the full surcharge. If a QCD would have kept them under the line, the stuck year costs the couple $2,296.80 in surcharges for the year.

Your state may take a cut too. Retirement withdrawals are taxed in some states, while others exempt part or all of them.

Three Moves That Make Your RMD Eligible for a QCD Again

1. Roll over before RMDs start. RMDs generally begin at age 73. If you roll the 401(k) into an IRA by December 31 of the year before you turn 73, no RMD gets trapped in the plan. Every RMD after that comes from the IRA, and a QCD can cover it.
2. Push this year’s giving into January. If you’ve already rolled over this year, hold the gift for a few weeks. The rolled money counts in the IRA’s year-end balance, so next year’s IRA RMD includes it. A January QCD can cover that RMD and stay out of your income.
3. Use the IRAs you already have. QCDs from an existing traditional IRA still work in the rollover year. They can’t meet the 401(k)’s RMD, though, because each workplace plan’s RMD must come out of that plan.

One exception: if you’re still working and don’t own 5% or more of the company, your plan may let you delay 401(k) RMDs until you retire. That leaves time to roll over before any RMD comes due.

The order of these steps matters. It can save four figures a year, and it’s worth running with a CPA or fiduciary advisor before you submit the rollover paperwork.

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