Unlock Tax Savings with IRA Giving: A Smart Strategy for Donors Age 70½ and Older

As donors age and become more financially secure, many begin to explore ways to give back while maximizing their retirement income. One powerful, often-overlooked strategy is donating directly from an Individual Retirement Account (IRA)—a tax-savvy approach known as a Qualified Charitable Distribution (QCD).

If you’re 70½ or older—and especially if you’re 75½ or beyond—this giving method can offer compelling tax benefits while allowing you to make a meaningful impact on the causes you care about.

What is a Qualified Charitable Distribution (QCD)?

A QCD allows individuals age 70½ or older to donate up to $100,000 per year directly from their IRA to a qualified nonprofit organization. For married couples, the limit doubles to $200,000 if each spouse has their own individual retirement account (IRA).

Unlike typical IRA withdrawals, QCDs are not counted as taxable income. This means:

• No federal income tax owed on the distribution

• Potential reduction in Medicare premiums and taxable Social Security

• You can still take the standard deduction and benefit from charitable giving.

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Why QCDs Matter More at Age 75½

Starting at age 73 (or 75, depending on birth year), the IRS requires you to take annual Required Minimum Distributions (RMDs) from your IRA. These RMDs are taxable and can increase your income in ways that impact your tax bracket and other financial areas.

By using a QCD to satisfy all or part of your RMD, you can:

• Avoid taxes on your RMD amount.

• Keep your adjusted gross income (AGI) lower.

• Reduce potential taxes on Social Security benefits.

• Minimize exposure to the Medicare IRMAA surcharge.

If you’re 75½, you’re already required to take RMDs—so giving through a QCD could be one of the most tax-efficient ways to meet your obligations while supporting a mission that matters to you.

Who Qualifies?

• You must be at least 70½ years old at the time of the gift.

• Funds must come from a traditional IRA (not a 401(k) or Roth IRA).

• The gift must be made directly from your IRA custodian to a qualified 501(c)(3) charity.

• You cannot receive any goods or services in return for the donation.

Example: How It Works

Imagine Jane, age 75½, is required to take a $15,000 required minimum distribution (RMD) this year. Instead of withdrawing the funds and paying taxes on them, she directs that amount straight to her favorite nonprofit through a QCD. Jane fulfills her RMD and owes zero taxes on the withdrawal, while the nonprofit receives the full $15,000 to support its mission.

If you or a loved one is 70½ or older, talk to your financial advisor or IRA custodian about making a Qualified Charitable Distribution. Then reach out to the nonprofit you wish to support—they can help provide any required documentation or acknowledgment.

If you’d like to learn more about how Crescendo Fundraising Professionals can support your nonprofit organization or municipality, feel free to reach out to us at ellen@crescendollp.com or 507-459-1989. Or, visit our website, crescendoconsultingllp.com.