For federal retirees who give to charity, there’s an important difference between your TSP and an IRA that becomes especially relevant after age 70½. Your TSP doesn’t provide Qualified Charitable Distributions, but an eligible IRA can. And with new charitable deduction rules taking effect in 2026, it’s worth understanding how the two strategies differ.
A New Charity Tax Break in 2026
For years, taxpayers generally needed to itemize deductions, meaning listing out specific expenses like mortgage interest, state taxes, and charitable gifts individually, instead of just claiming the flat standard deduction, to claim a federal deduction for charitable contributions. That changes in 2026.
Taxpayers who take the standard deduction can now deduct up to $1,000 of qualifying cash contributions, or $2,000 for married couples filing jointly. The deduction is available even if you don’t itemize.
That’s helpful, but it has a relatively low ceiling.
Consider a married couple who gives $10,000 to charity during the year but takes the standard deduction. They may be able to deduct $2,000 of those contributions. The other $8,000 doesn’t generate an additional federal charitable deduction under the non-itemizer rule.
For retirees giving substantially more than that, there’s another option worth understanding.
What a QCD Does Differently
A Qualified Charitable Distribution, or QCD, allows someone who is at least 70½ to have money transferred directly from an eligible IRA, generally a traditional IRA, rather than a workplace plan like the TSP, to a qualified charity.
The qualifying amount generally isn’t included in taxable income, and it can count toward the IRA owner’s required minimum distribution (RMD), the amount the IRS requires you to withdraw each year once you reach a certain age, whether or not you actually need the money. The 2026 maximum annual QCD limit is $111,000 per person.
That’s a very different tax treatment from simply taking money out of an IRA and then writing a check to charity.
With a regular IRA withdrawal, the distribution can increase taxable income. You may then be able to claim a charitable deduction, depending on whether and how you itemize.
With a properly executed QCD, the qualifying distribution is generally excluded from taxable income in the first place. But you don’t get to claim a second charitable deduction for the amount excluded from income.
Why This Matters After 70½
The QCD isn’t only about charitable giving.
For retirees with traditional IRA money, distributions can become an increasingly important tax-planning issue as RMDs enter the picture. A QCD can potentially satisfy some or all of an IRA owner’s RMD while keeping the qualifying amount out of taxable income.
That can matter when you’re trying to manage your taxable income in retirement.
It can also matter for Medicare. IRMAA (short for Income-Related Monthly Adjustment Amount, a surcharge added on top of standard premiums once your income crosses certain thresholds) can increase Medicare Part B and Part D premiums for higher-income beneficiaries. Reducing your taxable income can sometimes help you stay under those thresholds.
The TSP Catch for Federal Employees
Here’s the part that makes this particularly relevant to federal retirees: You can’t make a QCD directly from your TSP.
The QCD rules apply to eligible IRAs, not to workplace retirement plans like the TSP. That means a federal retiree whose retirement savings are primarily in the TSP can’t simply tell the TSP to send part of an RMD directly to a charity as a QCD.
That doesn’t mean you should automatically roll TSP money into an IRA. TSP and IRA accounts have different rules, investment choices and planning considerations. It does mean that if charitable giving is an important part of your retirement plan, the location of your retirement money matters.
What This Means for Federal Retirees
The new 2026 charitable deduction gives people taking the standard deduction another way to receive a federal tax benefit from charitable giving. But if you’re 70½ or older, regularly give to charity, and have traditional IRA assets, a QCD may deserve a closer look.
For federal retirees, there’s an additional question: Do you have the right type of account to use the strategy? That’s a planning question worth answering before you need to take your next RMD.
Your TSP, IRA and charitable giving strategy don’t have to be separate decisions. In retirement, how you move money between them can affect your taxes, your RMDs and potentially your Medicare costs.
If you’re approaching retirement or already retired from federal service, a Federal Retirement Consultant (FRC®) can help you look at how your TSP, IRA, pension and other benefits fit together before you make a major move.
