Dear FFTC, 

I’m turning 72 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 it comes time to start taking Required Minimum Distributions, or RMD, some may not personally need the additional income. When there is also motivation 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 all or a portion of their RMD to eligible charities — up to $100,000 each year — as a Qualified Charitable Distribution, or QCD. 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 avoid 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 fundholder and his wife chose to gift their RMD to support their local community. As longtime Concord residents, they made QCDs from their IRA to support one of FFTC’s regional affiliates, the Cabarrus County Community Foundation. In the first year their gift resulted in a nearly 90% increase in grants to local nonprofits. 

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, 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.