Key Points
If you have money saved in a traditional retirement account, required minimum distributions (RMDs) are one of the less pleasant realities you might eventually have to face.
Once you turn 73 or 75, depending on your year of birth, you’ll be forced to take mandatory withdrawals from your traditional IRA or 401(k) each year. If you don’t take those RMDs, you’ll face a 25% penalty on whatever funds you don’t remove.
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Unfortunately, RMDs can create a domino effect. Higher income can push you into a higher tax bracket, increase the portion of your Social Security benefits subject to taxes, and potentially trigger higher Medicare premiums through income-related monthly adjustment amounts, or IRMAAs.
The latter is a big deal, because in some cases, IRMAAs could add hundreds of dollars a month to the cost of Medicare. And those surcharges can apply to Part B as well as Part D.
The good news, though, is that you’re not necessarily doomed to face a tax headache just because you’re on the hook for RMDs. One tactic, in fact, could help you save thousands of dollars in taxes once RMDs begin.
QCDs can turn your RMDs into a tax break
If you’re comfortable financially and like the idea of supporting charitable causes, qualified charitable distributions (QCDs) are a great way to turn the burden of RMDs into an opportunity to do some good and lower your tax bill at the same time.
With a QCD, you can transfer money directly from an IRA to a qualifying charity. That transfer can count toward your RMD for the year without raising your taxable income.
In 2026, the QCD limit is $111,000 per individual. If you’re married and you and your spouse each have an IRA, you can donate up to $220,000 via QCDs and exclude that amount from your taxable income.
Also, while you can only do QCDs from an IRA, if you have a 401(k), it’s no problem. Just roll that balance into an IRA and initiate a QCD once that transfer is complete.
A small move that could have a big impact
QCDs aren’t a magic solution for every retiree. And it’s important to make sure you’re doing them correctly. That means sticking to the limits, making sure you do a direct transfer to a charity, and confirming that the charity you’re supporting qualifies.
But if you’re looking for a way to save money on taxes once RMDs kick in, QCDs are worth considering, especially if you don’t need your RMDs to cover living costs and you’d like to do some good with that money.
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