Use QCDs to Give More and Pay Less Tax in Retirement

If you’re in or approaching retirement, you might be wondering how you can give generously without disrupting your income plan.
That’s where smart charitable giving strategies like Qualified Charitable Distributions, or QCDs, come in.

QCDs allow retirees over age 70½ to donate directly from their IRAs to charity, cutting taxable income and satisfying Required Minimum Distributions (RMDs) at the same time.
Instead of writing a personal check, the money goes straight from your IRA to a qualified charity — so it doesn’t show up on your tax return as income.

This approach isn’t just generous. It’s tax-savvy. If you’re already giving each year, QCDs could help you save thousands in taxes over your retirement.

Why Charitable Giving With QCDs Matters in Retirement

A QCD is one of the most effective ways to align your charitable goals with your tax plan. By structuring donations this way, you keep more control over your taxable income, reduce what goes to the IRS, and ensure more of your money supports the causes you care about.

For many retirees, QCDs offer three big advantages:

• They lower your taxable income
• They help you meet your RMDs without adding extra income
• They let you give meaningfully without straining your retirement goals

If you’re already giving by writing checks or using a credit card, you might not be getting any tax break at all — especially if you take the standard deduction. QCDs give you a direct way to donate with clear tax benefits.

How a QCD Works

A Qualified Charitable Distribution is a direct transfer of up to $100,000 each year from your IRA to a qualified charity. If you’re married and both you and your spouse have IRAs, you can each give up to $100,000 annually.

Here’s a simple example:

• Sandra is 74 and needs to withdraw $30,000 from her IRA this year to meet her RMD.
• She usually gives $5,000 to charity every December. If she writes a check from her bank account, she still has to withdraw and pay taxes on the full $30,000.
• But if she sends $5,000 directly from her IRA to the charity as a QCD, that amount satisfies part of her RMD and doesn’t count as taxable income. She only pays taxes on the remaining $25,000.

Over time, this can lower what she pays in income tax, may reduce her Medicare premiums, and can help keep more of her Social Security tax-free.

When to Start Thinking About QCDs

You can start using QCDs at age 70½, even though RMDs don’t begin until age 73 or 75, depending on when you were born. That means you can start this strategy before the IRS requires you to take withdrawals.

Starting earlier gives you more years to use QCDs strategically, which can help lower your future RMDs and keep taxable income in check down the road.

How QCDs Help With Required Minimum Distributions

Many retirees are surprised by how much they’re forced to withdraw from their IRAs once RMDs kick in. Those withdrawals can push you into higher tax brackets, increase Medicare premiums, and cause more of your Social Security to be taxed.

QCDs help manage this by allowing you to satisfy part (or all) of your RMD with a direct charitable gift. The money leaves your IRA, but instead of being taxed, it goes straight to charity — no income reported on your return.

If you’re not spending all of your RMDs anyway, using them for QCDs can be a smart, tax-efficient way to fulfill your charitable goals.

Avoiding Common QCD Mistakes

QCDs are powerful, but they have rules. Here’s what to watch out for:

• The money must go directly from your IRA to the charity. If you withdraw it first, it counts as income.
• You must be 70½ or older on the date of the gift.
• The charity must be a qualified 501(c)(3). You can’t use QCDs for donor-advised funds or private foundations.
• The gift must be completed by December 31 to count for that tax year.
• Your IRA custodian might not label the QCD clearly on tax forms, so keep good records and get a receipt from the charity.

Working with a financial advisor can help you avoid small mistakes that could cause you to lose the tax benefit.

How Couples Can Benefit From QCDs

If both you and your spouse are over 70½ and each have IRAs, you can double your giving power. Each of you can donate up to $100,000 through QCDs, for a combined total of $200,000 per year.

For couples who already give generously and have sizable IRAs, this is a powerful way to support important causes while keeping your tax bill lower.

Aligning Your Money With Your Values

Using QCDs isn’t just about saving on taxes. It’s about putting your wealth to work for the causes and communities you care most about. For many retirees, this kind of giving adds meaning and purpose to their financial plan.

Whether it’s funding local food banks, your church, your alma mater, or medical research, giving through QCDs can be one of the most rewarding parts of your retirement — and doing it tax-smart helps you keep giving year after year.

Bring It All Together With a Thoughtful Plan

QCDs work best as part of your broader retirement plan. That means thinking about:

• Your income needs today
• Your future tax situation
• How to meet RMDs while paying the least tax possible
• The legacy you want to leave

A fiduciary advisor can help you build a retirement income plan that weaves together giving, tax savings, and long-term peace of mind.

Ready to See If QCDs Fit Into Your Retirement Plan?

At Haywood Wealth Management, we help thoughtful, generous people create retirement plans that include what matters most. If you’re over 70 or approaching retirement and want to give wisely, we can help you make the most of it.

Book a complimentary retirement planning session to explore how QCDs and other smart strategies can support your financial and personal goals.

👉 Schedule Your Retirement Pathfinder Analysis to get expert guidance and a plan designed to support the life you’ve worked so hard to create.