Qualified Charitable Distribution With Illiquid IRA Assets (2026)

What the Code says, and the 2026 numbers

A QCD is a creature of one paragraph, 26 U.S.C. 408(d)(8). The sentence that matters for an illiquid IRA is in subparagraph (B): a QCD is a distribution that is “made directly by the trustee” to a section 170(b)(1)(A) organization, on or after the date the owner has “attained age 70½”. Everything else follows from those words (our reading). One detail that trips people: the one-time election for a split-interest gift is subparagraph (F), added by SECURE 2.0 section 307; subparagraph (D) is the rule that treats all of your IRAs as one contract when working out how much of a distribution is taxable.

Source: 26 U.S.C. 408 and 170 (Cornell LII, read October 15, 2026); IRS Notice 2025-67, Notice 2024-80, Notice 2023-75 and Notice 2007-7; IRS Publication 590-B (2025); 26 CFR 1.408-8; Pub. L. 117-328, Division T, sections 107 and 307. Notice 2007-7 was written for the original 2006 provision; the statute text above is current.

Two timing facts from the same sources. The QCD age, 70½, is lower than the RMD age: SECURE 2.0 section 107 sets the applicable age at 73 for someone who attains age 72 after December 31, 2022 and age 73 before January 1, 2033, and at 75 for someone who attains age 74 after December 31, 2032, so an IRA owner can make QCDs for years before an RMD is due. And because the RMD for a year is figured on the IRA's balance as of December 31 of the preceding year (26 CFR 1.408-8(b)(2)), money that leaves in a 2026 QCD lowers the 2027 RMD (our reading). For how the RMD itself works with illiquid assets, see our RMD guide for illiquid IRA assets.

Five vehicles, five calendars: who can pay before December 31, 2026

A QCD needs cash (or a transferable asset) inside the IRA before the custodian pays the charity. Here is what the latest filings of five real vehicles say about when cash can arrive. All dates are as filed; funds may extend or suspend offers.

Source: SEC filings 0001104659-26-111954, 0001930087-26-000101, 0001104659-26-061258, 0001398344-26-017504, 0001398344-26-010317, 0001398344-26-018099, 0001213900-26-109281 and 0001662972-26-000111. Weekdays and deadlines by seven days or three business days are our arithmetic.

Read the table for the pattern, not for the vehicle. A fund that paid everything tendered (Golub in July) gives a QCD plan a date to work back from; a fund that repurchased 27% of what was tendered (Apollo) means the amount you tender is not the amount you receive; a monthly REIT with its December date on the last day of the year (BREIT) means the last useful window was the November one. Our pages on Golub Capital Private Credit Fund, Apollo Diversified Real Estate Fund, Thirdline Real Estate Income Fund and BREIT carry each vehicle's history, and tender offer funds explained and what is an interval fund explain the mechanics.

What the repurchase filings say about QCDs: nothing

We searched EDGAR full text for “qualified charitable distributions” in filings dated January 1, 2025 to October 15, 2026, and read every hit. The phrase is in 60 Form N-23C3A repurchase notices from 11 filers (AFA Asset Based Lending Fund, Thirdline Real Estate Income Fund, Cliffwater Corporate Lending Fund, Cliffwater Enhanced Lending Fund, Forum Real Estate Income Fund, Monachil Credit Income Fund, Privacore PCAAM Alternative Income Fund, Callodine Specialty Income Fund, Cascade Private Capital Fund, Privacore PCAAM Alternative Growth Fund and Sound Point Alternative Income Fund). In all 60 it appears once, inside the sentence from the IRS Form W-4R: “Tax withholding does not apply to transfers, direct rollovers to employer plans, qualified charitable distributions”. The same search finds 0 hits in Schedule TO-I, TO-I/A, N-CSR, N-CSRS and N-2 filings. (Search completeness is EDGAR's; we did not check every fund by hand.) So the funds' paperwork tells you how to sell shares for an RMD, a Roth conversion or a premature distribution, and says nothing about sending shares or proceeds to a charity. Thirdline's repurchase form lists the reasons for an IRA distribution as “Required Minimum Distribution-investor is over 73”, premature, normal, Roth, Roth conversion and “Other”; Callodine's lists the same first five. On our reading a QCD request goes through the IRA custodian's own form, with the tender as a separate first step.

One practical consequence is withholding. Thirdline's form says “your IRA Trustee/Custodian will withhold federal income tax at a default rate of 10%” unless you elect otherwise, while Notice 2007-7 (A-40) says a QCD is not subject to section 3405 withholding. Tell the custodian the payment is a QCD.

The 2026 timeline

Your custodian's own QCD cut-off is earlier than December 31 and is not in public filings; ask it in October. Our calendar of all the year-end dates is in the year-end tax calendar for non-traded REIT and BDC investors.

What cannot be a QCD

Source: 26 U.S.C. 170, 408 and 4966 (Cornell LII); IRS Notice 2007-7. For a gift to a charitable remainder trust funded outside the IRA see charitable remainder trusts and real estate.

Illiquid shares are not excluded by the statute or by the IRS forms. The 2026 Instructions for Forms 1099-R and 5498 say: “To report a QCD, use code Y with”, and then list code 7 for a QCD from a non-inherited IRA, code 4 for an inherited IRA, and “Code K for a QCD reporting distributions of traditional IRA assets not having a readily available FMV”. Code K covers stock or debt “not readily tradable on an established securities market”, LLC, partnership and trust interests, and real estate. For property, the same instructions have the payer put “the FMV of the securities or other property on the date of distribution” in box 1. That is a reporting path, not a promise: the fund's transfer agent has to re-register the shares to the charity, the charity has to accept an illiquid holding, and the custodian has to value it (our reading, no filing we read says any of the three will).

How it shows on Form 1099-R and Form 1040

The 2026 Form 1040 instructions were not final as of October 15, 2026, so line numbers for the return due April 15, 2027 are not verified; the lines above are from the 2025 instructions.

The 2026 law change: why the exclusion matters more

For taxable years beginning after December 31, 2025, Pub. L. 119-21 (the 2025 budget law) changed the deduction a taxpayer would otherwise take for a gift made from money outside the IRA. Section 170(b)(1)(I) now allows itemized charitable contributions “only to the extent that the aggregate of such contributions exceeds 0.5 percent” of the contribution base, and section 170(p) allows a non-itemizer a deduction of up to $1,000 ($2,000 on a joint return) for cash gifts, but not for a donor-advised fund or a supporting organization. A QCD is outside both: it never reaches the return as a deduction, because section 408(d)(8)(E) denies the deduction and the amount is left out of gross income instead (our reading). Whether that beats giving cash from a taxable account depends on your own return; that is a question for your CPA.

A worked example, with numbers from real filings

An owner aged 76 in 2026 has $400,000 in a traditional IRA at December 31, 2025, all pre-tax, and wants to give $10,000 to a charity by QCD. The inputs are our assumptions; the factor and the vehicle prices are from the filings above (our arithmetic).

Fill rates change at every offer, NAVs change before the pricing date, and a tender is not a promise of proceeds. The CSV has each input and its source.

The example shows why one vehicle can fund a QCD and another cannot: for the same $10,000, a fund that pays 100% needs 413.74 Golub shares, while a fund that repurchases 27% needs a tender nearly four times the size (Apollo, $37,037.04 against $10,000).

If the tender does not fill by December 31

These are the routes the rules allow, in the order we would ask about them (our reading, not advice):

• Use another IRA that has cash. A QCD can come from any IRA you own other than an ongoing SEP or SIMPLE IRA (Notice 2007-7, A-36), and for the RMD the amount from one IRA counts for all (our RMD guide covers how several IRAs are aggregated). The illiquid IRA then keeps its shares.
• Ask whether an in-kind QCD is possible. Code K with Y exists on the 2026 Form 1099-R. Ask three parties in writing: the fund (will its transfer agent register shares to the charity?), the charity (will it accept and value them?) and the custodian (can it make the distribution and report code K?). A self-directed IRA custodian is the likeliest to know; see self-directed IRA real estate rules.
• Let the QCD slide to 2027. A QCD is optional; the RMD is the legal duty. Nothing in 408(d)(8) requires a QCD in 2026, so a gift that misses December 31 can be made in 2027 and then counts against the 2027 cap and RMD (our reading). What cannot slide is the 2026 RMD itself: 26 U.S.C. 4974(a) taxes a shortfall at 25 percent.
• Do not take cash and write the check yourself. A QCD has to be paid “directly by the trustee”; cash that lands in your own account is an ordinary taxable distribution (our reading), and Notice 2007-7 (A-43) says a payment that fails the QCD rules is a taxable distribution plus a gift. A check payable to the charity that the IRA trustee issues and you deliver is different (A-41).

What to settle before the cut-off

• Your IRA holds only illiquid vehicles: tender in the window that pays in 2026 (table above), ask the custodian for its QCD cut-off now, and plan for a partial fill.
• You have a liquid IRA as well: use it for the QCD and leave the illiquid IRA alone this year.
• You want a DAF or your own foundation to receive the gift: a QCD is not the tool; see donor-advised funds and appreciated property.
• You are in the first RMD year or have an inherited IRA: a beneficiary who has reached 70½ may make QCDs (Notice 2007-7, A-37); check the RMD rules before you plan.

What a holder can do with this

• Ask the custodian three things in October. Its QCD cut-off date, whether it pays the charity by its own check or by wire, and what it needs to report an in-kind QCD with code K.
• Check the next window for each fund you hold. The repurchase notice (N-23C3A) or the Schedule TO-I on EDGAR gives the deadline, the pricing date and the payment lag.
• Ask your CPA: Is my IRA's taxable amount all of the distribution (nondeductible basis, Form 8606)? Did I deduct IRA contributions after 70½ that reduce my QCD? How does the 2026 itemized floor and the non-itemizer deduction compare with a QCD for me? Will the custodian use code Y on the 1099-R, and how will I report it on the 2026 Form 1040?
• Keep the paper. The charity's written acknowledgment of the gift, the custodian's confirmation that the payment was a QCD, and the date it left the IRA.

FAQ

Sources, read and saved on October 15, 2026: 26 U.S.C. 170, 408, 4966, 4974 and 6072 (Cornell Legal Information Institute); 26 CFR 1.408-8 (Cornell LII); Pub. L. 117-328, Division T, sections 107 and 307 (congress.gov); IRS Notice 2025-67, Notice 2024-80, Notice 2023-75 and Notice 2007-7; IRS Publication 590-B (2025), Publication 526 (2025), Instructions for Form 1040 (2025) and Instructions for Forms 1099-R and 5498 (2026); SEC EDGAR full-text search results and the 60 Form N-23C3A documents they returned; and filings 0001104659-26-111954, 0001104659-26-061258, 0001930087-26-000101, 0001398344-26-017504, 0001398344-26-010317, 0001398344-26-018099, 0001213900-26-109281 and 0001662972-26-000111. This is analysis of public documents, not investment, legal or tax advice.