The Totally Legal Way to Avoid Your RMDs Without Angering the IRS
Key Points
RMDs could raise your taxes, but you'll pay a steep penalty for not taking them.
Donating your RMD to charity can help you avoid the tax increase.
Make sure you understand the rules before attempting a qualified charitable distribution (QCD).
- The $23,760 Social Security bonus most retirees completely overlook ›
When you turn 73 and begin required minimum distributions (RMDs), it can sometimes feel like you have no good options. Either you withdraw the funds and pay thousands of dollars in additional taxes, or you skip your RMD and pay a 25% tax penalty on the amount you should have withdrawn.
There is a little-known third option, though. It doesn't help you hold onto your savings, but it can help you avoid the extra taxes.
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The IRS offers one alternative to IRA and 401(k) RMDs: a qualified charitable distribution (QCD). This is where you donate your RMD to a qualifying charitable organization. Done correctly, you fulfill your RMD, and the IRS won't tax you on any of it.
But it's a bit trickier than you'd expect. You can't withdraw the money from your account and give it to a charity. You might be able to write off the charitable deduction then, but it won't count as a QCD.
A true QCD requires you to notify your plan administrator of the organization you want to donate to. Then it will either send the funds to the organization or cut you a check made out to the organization, which you can mail or hand over.
You have until Dec. 31, 2026, to do this for the 2026 tax year, or April 1, 2027, if you'll be 73 by the end of the year. But it doesn't hurt to get started earlier if you think a QCD could be right for you. Get it out of the way now so you don't have to worry about RMDs for the rest of the year.
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