One big drawback of saving for retirement in a traditional IRA or 401(k) is that eventually, you'll have to start taking withdrawals from your account -- whether you want to or not.
Required minimum distributions, or RMDs, begin to kick in at age 73 (or 75 for younger savers). And if you don't take your RMD, you could face a pretty serious 25% penalty on the sum you leave in your retirement plan.
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The problem, of course, is that RMDs can trigger a huge tax bill for you. But there's a way to potentially get out of that, and it's by donating the money to charity. To avoid a tax hit, though, you have to go about that donation the right way.
Don't make this costly RMD mistake
When you take your RMD and then write a check to a charity, you can deduct that donation on your taxes. But your RMD will still count as taxable income in that situation. And the charitable deduction you take may not fully offset the effect of having your RMD increase your adjusted gross income (AGI).
A higher AGI could have a number of consequences. It could mean:
- Higher federal taxes overall
- A higher likelihood of having to pay taxes on your Social Security benefits
- A higher risk of Medicare surcharges known as income-related monthly adjustment amounts
A better bet? If you plan to donate your RMD to charity, do a qualified charitable donation, or QCD.
With a QCD, you transfer money directly out of your retirement plan to a qualified charity. This means your RMD won't count as taxable income and will not be included in your AGI.
In 2026, you can donate up to $111,000 in QCD form. And if both you and a spouse are each on the hook for an RMD this year, you can each do a QCD of up to $111,000.
Know the rules
RMDs can be a huge annoyance when you don't need the money and are only taking funds out of your savings because the IRS is forcing you to. Donating your RMD to charity could reduce your tax burden, but you need to go about that donation the right way.
You should also be aware that while the One Big Beautiful Bill Act did not change QCD rules, it changed the way tax-filers can deduct charitable donations in 2026. For this reason, you may want to talk to a financial advisor or tax professional if charitable giving is a priority for you this year.
