When you reach age 73, you’ll have to start taking required minimum distributions (RMDs) from your traditional IRAs.
If you have a lot of money in your IRAs, RMDs can be a real tax headache.
RMDs are taxable income, so they increase your adjusted gross income and bump you into a higher tax bracket. They also can increase the federal income tax on your Social Security benefits and cause higher Medicare premiums.
But if you’re charitably inclined, you can use a qualified charitable distribution (QCD) to give a charity the money and eliminate any taxes on your RMD.
The Magic of the QCD
QCDs can kill many birds with one stone. A QCD:
1.
Satisfies RMD requirements. The QCD counts toward your required minimum distribution (RMD). At age 73 and older, you must take RMDs from your traditional IRAs, and QCDs can satisfy this requirement.
2.
Excludes distributions from tax. QCDs are excluded from your taxable income, unlike regular IRA distributions that would typically count as income. This means you don’t pay income tax on the distributed amount (up to $108,000 in 2025).
3.
Lowers adjusted gross income (AGI). By reducing your ... Log in to view full article.
