If you are 73 or older, the IRS makes you pull money out of your traditional IRA every year.
That withdrawal is called a required minimum distribution, or RMD, and it lands on your tax return as ordinary income whether you need the cash or not.
But there is a workaround that a lot of retirees still do not know about: sending that money straight to charity instead.
It is called a qualified charitable distribution, or QCD.
You ask your IRA custodian to transfer money directly to a qualifying charity.
Because the money never touches your hands, it does not count as taxable income.
You can move up to $105,000 per person in 2024, and $108,000 in 2025, according to IRS inflation adjustments.
The mechanics matter more than the label.
The check has to go from your IRA to the charity.
If you take the distribution first and then write a personal check, you lose the benefit.
You would be claiming it as a charitable deduction instead, and most retirees now take the standard deduction, which means that write-off often does nothing for you.
Here is where it gets interesting for households that do not itemize.
A QCD lowers your adjusted gross income, not just your taxable income.
A lower AGI can ripple through your return.
It can reduce how much of your Social Security benefits get taxed.
It can lower your Medicare Part B and Part D premiums, since those are tied to income thresholds.
It can also help you dodge the net investment income tax and higher capital gains brackets.
Say your RMD is $12,000 and you already give $3,000 a year to your church or a local food bank.
Route that $3,000 through a QCD and the taxable portion of your RMD drops to $9,000.
You just kept more of it out of the government's hands.
The transfer must be completed by December 31 of the tax year.
There is no carrying over unused amounts to next year.
Also, you cannot send a QCD to a donor-advised fund or a private foundation while you are alive, and it cannot go to a political campaign.
It has to be a qualified 501(c)(3) charity.
You also need to confirm your RMD has been satisfied.
A QCD counts toward your RMD, but only if it is made in the same year.
If you have already taken your full RMD, a later QCD still works as a tax-free gift, but it will not reduce that year's required amount.
Ask your custodian for a written confirmation and keep the receipt from the charity.
Some have online forms; others still require a phone call and a paper form.
Start the process in early December, not the last week of the month, because processing can take several days.
The takeaway here is that a QCD is one of the few moves in the tax code that rewards generosity without punishing you elsewhere on the return.
Final Thoughts
If you are charitably inclined and facing an RMD you do not need, it is worth a call to your IRA provider and your tax preparer before year-end.