Dear FFTC, 

I’m turning 73 next year and will start taking annual distributions from my Individual Retirement Account as required by the IRS. I don’t need the full amount of the distribution for my own expenses and would like to do something meaningful with the money. I also want to minimize taxes. Any ideas?  

— Retired and Still Planning 

Thank you for your question and congratulations on being well prepared for retirement! When the time comes to start taking Required Minimum Distributions, if you don’t need the additional income and would prefer to use this income in a meaningful way, we recommend making a charitable gift using the RMD. It’s a convenient and tax-smart solution. 

Individuals age 70½ or older can give up to $108,000 each year from their IRAs each year to eligible charities as a Qualified Charitable Distribution. For those 73 and older, this can include some or all of their RMD. The QCD is made as a direct transfer from the IRA, thus satisfying the RMD rules while excluding the amount from taxable income. Gifting through a QCD to limit taxable income may also preserve an individual’s tax bracket or the amount that Social Security benefits are subject to tax. 

The requirement of an “eligible charity” is readily met by most public charities and by many of Foundation For The Carolinas’ philanthropic vehicles and giving programs. So, beyond the tax advantages, donating through a QCD allows you to make an impact in your community and support causes you care about. 

For example, one Foundation For The Carolinas donor supports her local community by making QCDs from her IRA to three Community Impact Funds. Passionate about youth development, animal welfare and access to healthcare, she decided to leverage FFTC’s grantmaking expertise to support our region’s most compelling issues. 

Qualified Charitable Distributions from IRAs can be made to any of FFTC’s regional affiliates, as well as FFTC Community Impact Funds, Field of Interest Funds, Designated Funds, Agency Funds and Scholarship Funds. Donor advised funds, most private foundations and supporting organizations are not eligible charities for QCD payments. 

Contact Philanthropy@fftc.org to learn more about leveraging retirement assets for charitable giving and other strategic giving options.

FFTC does not provide tax or legal advice. The information presented here is for educational purposes and is not intended to be a substitute for individualized tax, legal or investment advice.