A Smarter Way to Give from Your Retirement Account

A Smarter Way to Give from Your Retirement Account

Transform required withdrawals into lasting impact.

By:  Kansas City Hospice & Palliative Care

Required Minimum Distributions (RMDs). Qualified Charitable Distributions (QCDs). What does it all mean?

As retirement milestones approach — whether for you, a spouse, or a parent — these terms start to matter. Understanding how RMDs and QCDs work together can help you make thoughtful financial decisions while turning required withdrawals into meaningful impact.

While this isn’t financial advice and Kansas City Hospice isn’t a financial advisor, these could be new ideas for you to discuss with your financial advisor, if you’re interested, next time you meet.

Understanding RMDs

If you’ve saved in tax-deferred retirement accounts such as a traditional IRA, 401(k), or 403(b), you’re required to begin taking mandatory withdrawals at a certain age — 73 for most individuals, or 75 if you were born in 1960 or later.

You must generally take these withdrawals, known as RMDs, by December 31 each year. Failing to withdraw the required amount can result in a penalty of up to 25% of the amount not taken.

For some retirees, RMDs generate more income than they actually need. When combined with other income sources, those distributions may push them into a higher tax bracket. That increase can also affect the taxation of Social Security benefits and Medicare premiums.

A Tax-Savvy Solution: QCDs

One strategic way to manage this situation is through a QCD, sometimes called an IRA charitable rollover.

If you’re age 70½ or older and have a traditional IRA, you can direct a distribution from your IRA straight to Kansas City Hospice & Palliative Care. The distribution is excluded from your taxable income because your IRA transfers the funds directly to the nonprofit.

You may give up to $115,000 annually from your IRA through a QCD without including the amount in your taxable income.

Complete your IRA distribution by December 31 to count for the current tax year.

Key Benefits of a QCD

• No taxes owed: The distribution stays out of your taxable income, even if you don’t itemize deductions.
• Satisfies your RMD: Beginning at age 73, a QCD can count toward your Required Minimum Distribution.
• Flexible timing: You can make a QCD any time after turning 70½, even before RMDs begin.
• Immediate impact: Your gift provides direct support right away while offering meaningful tax advantages.

Frequently Asked Questions

How does a QCD reduce my taxes?
Normally, withdrawals from your IRA are added to your taxable income. A QCD avoids this by transferring funds directly to a nonprofit, helping reduce your taxable income and potentially keeping you in a lower tax bracket.

Can I make a QCD before I need to take RMDs?
Yes. Anyone age 70½ or older can make a QCD, regardless of whether RMDs have begun. These gifts remain tax-free and may reduce future required distributions.

For individuals looking to give strategically, QCDs offer a powerful way to align philanthropic goals with thoughtful financial planning, benefiting both the donor and the mission.

To explore how a QCD could support Kansas City Hospice & Palliative Care while benefiting your tax planning, visit: https://kchospice.org/getcreative/

Disclaimer: This is not financial advice and Kansas City Hospice is not a financial advisor. Please consult a professional before making any financial decisions.