Smart Moves for Your RMD: How to Give and Save on Taxes
As the leaves turn and the final quarter of the year begins, October is the perfect time to review your financial standing and prepare for year-end tax strategies. At Stanaland Dodson & Associates LLP, we are always looking for ways to help you plan smarter, act earlier, and reduce surprises in April. In this month’s blog, we highlight one of the most overlooked tax planning tools for retirees: Required Minimum Distributions (RMDs).
Understanding Required Minimum Distributions (RMDs)
If you’re age 73 or older and have a retirement account such as a traditional IRA, 401(k), 403(b), or another qualified plan, the IRS requires you to begin taking Required Minimum Distributions (RMDs) each year. These distributions are taxable, and failure to take the correct amount can result in hefty penalties.
According to the IRS, you must begin taking RMDs by April 1 of the year following the year you turn 73, and each subsequent RMD must be taken by December 31 of the tax year. See more on the IRS website.
But there is a strategic move that can help lower your taxable income while also supporting the causes you care about.
Giving Smart: Qualified Charitable Distributions (QCDs)
Did you know that you can satisfy your RMD requirement while also avoiding income tax on that amount—if you donate directly to a qualified charity?
This tax strategy is called a Qualified Charitable Distribution (QCD). Instead of withdrawing the funds and then donating them (which is taxable), you can have your retirement plan administrator send the funds directly to the charity of your choice. The amount donated via QCD counts toward your RMD but is excluded from your taxable income.
Why is this important?
- Lower taxable income may reduce your Medicare premiums.
- It may also keep you out of higher tax brackets.
- It supports causes that matter to you in a meaningful way.
Important notes:
- You must be at least 70½ years old to make a QCD.
- The maximum annual QCD amount that can qualify is $100,000 per individual.
- The charity must be a 501(c)(3) organization.
Timing Matters: Don’t Wait Until December
Too often, people wait until the last few weeks of the year to take their RMD or explore QCDs. This can lead to missed opportunities and rushed decisions. Now is the time to:
- Confirm whether you’ve taken your full RMD for 2025.
- Decide whether you want to direct a portion of it to charity via QCD.
- Coordinate with your financial advisor or plan administrator to get the paperwork in place.
We’re Here to Help
Whether you’re looking to optimize retirement withdrawals, minimize tax exposure, or explore charitable giving strategies, our team at SDA is here to help. We’ll work alongside your financial planner to make sure every dollar serves your goals and every decision aligns with your values.
If you’re not sure where to start, reach out. A 30-minute call this month could save thousands in April.
Stanaland Dodson & Associates LLP
Serving clients “Beyond the Bottom Line” since 1984.
📞 (336) 765-2817
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