If you are 73 or older and staring down a required minimum distribution you don't actually need, there's a move many retirees miss.
It lets you send money from your IRA directly to a charity and keep that withdrawal out of your taxable income entirely.
It's called a qualified charitable distribution, or QCD.
Once you hit 70½, you can direct up to $105,000 per year (the 2024 limit, indexed for inflation) from a traditional IRA straight to a qualified charity.
The money never touches your checking account, so it never shows up as income on your tax return.
A normal IRA withdrawal gets added to your adjusted gross income, which can trigger higher Medicare premiums, taxes on Social Security benefits, and a bigger bill on investment income.
The catch is that you have to follow the rules exactly.
The transfer must go directly from the IRA custodian to the charity.
If you take the money out first and write a check yourself, it doesn't count.
You also can't use a QCD to fund a donor-advised fund or a private foundation.
A QCD can satisfy your required minimum distribution for the year.
So if you're charitably inclined and you were going to give anyway, routing that gift through your IRA can shrink your taxable income without changing how much you donate.
One more twist worth knowing: starting in 2023, you can make a one-time QCD of up to $53,000 (inflation-adjusted) to a split-interest entity like a charitable remainder trust or a charitable gift annuity.
That lets you give a lump sum to charity and still collect income from it for life.
It's a narrow window, but for the right retiree it's a real planning tool.
If you're over 70½, you have a traditional IRA, and you give to charity, run the math on a QCD before you write another check.
Call your IRA custodian and ask what their process is — most have a simple form.
Then confirm the charity is eligible to receive one.
And unlike a lot of retirement strategies, this one doesn't require you to guess where markets are headed.
The takeaway: if you're charitably minded and sitting on an IRA you don't need, a QCD can turn a tax problem into a gift.
Final Thoughts
Talk to a tax professional about your specific situation before you move money.