Leaving Your IRA to Your Church vs. Your Kids: The Tax Trade-Off

A pre-tax IRA left to a church generally avoids income tax, while your children pay it as they withdraw. See the trade-offs, QCD rules and the 10-year rule.

A pre-tax IRA left to a qualified charity such as your church generally passes without income tax, while the same IRA left to your children is taxed to them as ordinary income as they withdraw it, usually within ten years. That tax gap is real, but it is one factor, not the answer. The right split depends on your family, your giving goals and what else you own.

The table compares the three common choices at a glance, and the sections below explain each one.

I'm Ryan Langan, CFP®. My faith shapes how I see this: what we have is entrusted to us, so a legacy deserves a plan, and you can see how I approach that on my Christian retirement planning page. You do not need to share that view to use what follows, and I will not tell you whether to give to your church, your children or both.

How is an IRA taxed when your children inherit it?

Your children generally owe ordinary income tax on every dollar they withdraw from an inherited traditional IRA.

The IRS says beneficiaries must include taxable distributions in their gross income. That is because the money went in before tax, so it comes out taxable. It also does not get the stepped-up basis that many other inherited assets may receive, since it is income in respect of a decedent, which the beneficiary reports as income. Here is how that plays out:

• Taxed at their rate, not yours. If your children are in their peak earning years, withdrawals may be stacked on top of their salaries and taxed at a higher rate than yours. If they earn less than you do, the opposite may be true. Your own tax bracket is only part of the story.
• A lump sum is allowed, but it bunches the tax. Beneficiaries can usually take the whole balance at once, as the IRS notes. That may push a large amount into one tax year and into a higher bracket.
• An inherited Roth IRA is different. Withdrawals of contributions are tax free, and earnings are generally tax free once the Roth account is at least five years old, according to the IRS. The cost is that a Roth conversion means you pay tax now, which is covered below.

What does the SECURE Act 10-year rule mean for your children?

For most non-spouse beneficiaries, the account must be emptied by the end of the tenth year after the owner's death.

For IRA owners who die after 2019, the IRS explains that the SECURE Act requires the entire balance to be distributed within ten years. Adult children are generally subject to this rule. A few people are treated differently, and the IRS calls them eligible designated beneficiaries:

• A surviving spouse
• A minor child of the account owner, until age 21, when the 10-year clock starts
• A disabled or chronically ill person
• Someone not more than ten years younger than the account owner

Eligible designated beneficiaries may be able to stretch withdrawals over a longer period. For everyone else, the ten years is a deadline, and whether yearly withdrawals are also required depends on one date. If you had already started required distributions when you died, most adult children must take a withdrawal each year in years one through nine and empty the account by the end of year ten, under the final regulations that apply from 2025. If you had not started, yearly withdrawals are generally not required, and the only deadline is the end of year ten. Roth IRAs are generally treated as if the owner died before that date. The IRS lays out the options in its chart of required minimum distributions for IRA beneficiaries, and your CPA can tell you which applies to your situation.

The practical effect is that your children cannot leave the account to grow tax-deferred for decades. What to weigh is timing. Ten years gives them room to spread the tax across several years, but it also means the tax bill arrives sooner and may land during the years they earn the most.

How is an IRA taxed when your church inherits it?

A qualified charity generally pays no income tax on what it receives, so the full pre-tax balance can go to the ministry.

Churches and other organizations recognized as tax-exempt under section 501(c)(3) do not pay income tax on distributions they receive. If your church is the named beneficiary, the entire account can reach it without the income tax your children would pay. The SECURE Act's 10-year rule applies to individuals, so the IRS treats a beneficiary that is not an individual under the older rules. Because the church owes no income tax, the payout timing matters far less for tax than it does for your children.

There are limits to know:

• You do not receive an income tax deduction for this. The advantage is that no income tax is owed on the money, not that your return shows a deduction. Your estate may qualify for a charitable estate tax deduction, which rarely matters because the 2026 federal estate tax exemption is $15 million.
• Your church needs to be a qualified organization. Confirm that with them, and ask for the church's exact legal name and EIN, because the custodian will need them to set up the beneficiary designation.
• Roth assets use up a benefit that charities do not need. A charity pays no tax either way, so many people consider leaving pre-tax dollars to charity and Roth or taxable dollars to family. That is a common line of thinking, not a rule, and it depends on what you own.

If you want flexibility, many sponsors let you name a donor-advised fund as an IRA beneficiary. That may suit you if you want to support several ministries or let your children recommend grants. The gift is irrevocable and sponsors may charge fees, so ask whether yours accepts IRA beneficiary designations.

What happens if your church and your children share one IRA?

A shared IRA can shorten your children's payout if the church's share isn't handled promptly, so many people keep the two apart.

A church is not an individual, so when it is named on the same IRA as your children, it can affect who counts as a designated beneficiary. The IRS generally decides that on September 30 of the year after your death, as Publication 590-B explains. If the church's share has not been paid out by then, or the account has not been divided into separate inherited accounts in time, your children may lose designated-beneficiary treatment. If you died before your required beginning date, that can put them on the 5-year payout instead of the 10-year rule. If you died after it, payouts are generally based on your remaining life expectancy. Either way, the timing is set by the rules and not by your children.

One simple fix is a separate IRA with the church as the sole beneficiary, so your children's account never has a charity on it. What you give up is simplicity: it is one more account to keep, and moving money between IRAs has its own rules, so ask your custodian how to do it as a direct transfer. Your CPA or estate attorney can confirm the deadlines for your situation.

What is the trade-off between leaving pre-tax dollars to charity and to your children?

Every dollar of pre-tax IRA you leave to your church avoids income tax, and every dollar you leave to your children is reduced by it.

Here is a plain way to see it. If your IRA is $100,000 and your children's combined federal and state tax rate on withdrawals is 24%, they would net roughly $76,000, and your church would receive the full $100,000. This is a hypothetical example for illustration only, using round numbers to show the mechanics. It is not a prediction for any family, because the actual rate depends on their income when they withdraw. Compare that with leaving the same $100,000 in a taxable brokerage account, where your children may receive a stepped-up basis, as explained in IRS Publication 551, and would generally owe tax only on growth after your death. Different accounts carry different tax bills for the same dollar amount.

That is the case for pointing pre-tax dollars toward charity. Here is the other side:

• Your children may need the money. Tax efficiency is not the same as fairness or need. A smaller after-tax inheritance may matter to a child with a disability, debt or a modest income.
• You may need the money. Anything you promise to leave is only what remains after your own spending, healthcare and long-term care. Planning for your own needs comes first.
• Your goals may not be about tax. Some people want their children to receive the same amount they give the church, or want to leave a specific amount to each. Tax is one input to that choice, and it does not outrank the others.

The verse many people think of here is Proverbs 13:22 (NIV): "A good person leaves an inheritance for their children's children." Christians read passages like this in different ways, and many also see giving to the church as part of their stewardship. This post does not settle which view is right. It helps you see what each choice costs and who bears it.

Can a QCD during your life change the picture?

Yes. A qualified charitable distribution (QCD) lets you give from your IRA while you are alive, and the gift is not counted as taxable income.

To qualify, you must be at least 70½, and the money must go directly from your IRA custodian to a qualified charity. The limit for 2026 is $111,000 per person, according to IRS Notice 2025-67, and the IRS explains the basics in its guidance on QCDs. A QCD can also count toward your required minimum distribution, which generally starts at age 73 or 75, depending on your birth year. Because the gift stays off your return, it may also help with income-based costs like Medicare IRMAA surcharges, depending on your situation.

A QCD and a beneficiary designation do different jobs, and each has a cost:

• A QCD gives now, and a beneficiary designation gives later. With a QCD you see the gift land and your church may put it to use sooner. What you give up is that the money is gone, so you have less for your own needs and less for your children.
• A QCD shrinks the account your children would inherit. That also shrinks the future taxable inheritance, which may be your intent. It is still a choice between giving and leaving.
• You cannot also deduct a QCD. Its benefit is the income it keeps off your return.
• A QCD cannot go to a donor-advised fund. If your gift needs to be flexible, the options differ. Our post on QCDs, donor-advised funds and cash walks through them.
• QCDs come only from IRAs. A 401(k) would need to be rolled into an IRA first, and that has its own rules.

Many people do both: they use QCDs for regular giving during life and name the church as a partial beneficiary at death. Neither choice rules out the other.

Some people also look at a charitable remainder trust, which can pay income to your children for a period before the rest goes to charity. It involves legal documents and costs that this post does not cover, so it is a question for your estate attorney.

Do state inheritance taxes change the math?

They can. Some states tax what heirs receive, and the rate often depends on who the heir is.

Pennsylvania is one example. The state's Department of Revenue lists a 4.5 percent inheritance tax rate on transfers to direct descendants, and it exempts qualifying charitable organizations. That is separate from the federal income tax your children would pay on IRA withdrawals. A traditional IRA is generally subject to Pennsylvania inheritance tax when the owner was 59½ or older at death, per the Department of Revenue, which describes most retirees. Your estate attorney can confirm how it applies to yours. If you live in another state, the rules may be quite different. If you are a Pennsylvania household, this is worth raising early, and our Chester County retirement planning page explains how I work with local families.

So in Pennsylvania, pre-tax dollars left to your children may face both the state inheritance tax and federal income tax as they withdraw, while the church's share generally avoids both. That is a factor to weigh, but it is not a reason on its own to leave less to your family than you want to.

Could Roth conversions change who pays the tax?

They can move the tax bill from your children to you, and that has a cost.

If you convert some of your pre-tax IRA to Roth while you are alive, you pay tax on the conversion now, at your rate, and your children may later inherit tax-free withdrawals. The costs are real: a conversion raises your income for the year, which may increase your Medicare premiums, and you pay the tax well before anyone benefits. Our posts on Roth conversions in your 60s and the Roth conversion window before RMDs explain how to think about that cost.

How do you decide, and what should you do before changing a beneficiary form?

Start with your own needs, then your family's, then your giving goals, and let tax shape the details.

• Step 1: Estimate what you need. Spending, healthcare and long-term care come first. What you leave is what remains.
• Step 2: Write down what you want each person or ministry to receive. Set the goal before you look at the tax, then match the account to the recipient, since pre-tax, Roth and taxable dollars are taxed differently.
• Step 3: Review your beneficiary forms. Check primary and contingent names, percentages and the church's exact legal name. Name a contingent beneficiary, or ask your custodian how it would treat a church that merges or closes. You can change a designation while you are alive, and it generally controls who receives the account, not your will, so keep it current.
• Step 4: Bring in your CPA and estate attorney. They can confirm how state taxes, trusts and your documents fit together. I coordinate with them on the financial side as part of estate planning and tax planning.

A plan cannot tell you what to give or to whom. It can show what each option means for your income, taxes and family, including what you may have less of. See our retirement planning services, or how our flat fee works. For the yearly side of giving, read How to Tithe on Retirement Income.

Frequently asked questions

Can I give to my church directly from my IRA?

Yes, if you are at least 70½. A qualified charitable distribution (QCD) sends money from your IRA custodian straight to a qualified charity such as your church, and it is not counted as taxable income. The 2026 limit is $111,000 per person, per IRS Notice 2025-67. What you give up: you cannot also deduct it, and the money leaves your IRA, so less remains for you and your heirs.

Can I leave my IRA to my children, and how is it taxed?

Yes. Name them as beneficiaries on the account. They generally owe ordinary income tax on what they withdraw from a traditional IRA, and most adult children must empty it by the end of the tenth year after your death. An inherited Roth IRA is treated differently. The cost is that the tax lands on them, at their rate, and may arrive in their highest-earning years.

Does the 10-year rule apply if I leave my IRA to my church?

The SECURE Act's 10-year rule applies to individual beneficiaries. The IRS treats a beneficiary that is not an individual under the older rules, so your church would not be on the same ten-year clock as your children. Because the church generally pays no income tax, the timing matters less for tax than it does for your children.

Where does your legacy fit in your plan?

If you would like to see how a gift to your church and an inheritance for your children fit alongside your income, taxes and healthcare, you can book a Retirement Strategy Session. You deserve a real plan, not a sales pitch, not a template.

Reviewed November 12, 2026, by Ryan Langan, CFP®. Figures are for tax year 2026, and the dollar example is a simplified illustration, not a projection. This post is educational and is not tax, legal or religious advice. Tax rules change, so please coordinate with your CPA and estate attorney.

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