Using QCDs in your retirement and year-end planning

As the end of the year approaches, many retirees review their financial plans, required minimum distributions (RMDs), and charitable giving goals. For individuals at Required Minimum Distribution age, qualified charitable distributions (QCDs) can be a powerful way to bring those priorities together.

What is a QCD?

A qualified charitable distribution is a direct transfer of funds from an IRA to a qualified charity. Instead of withdrawing taxable income and writing a personal check, the funds go straight to the organization. This strategy allows the gift to be excluded from your taxable income.

How QCDs fit into retirement planning

Retirement is a time when income, taxes, and giving often intersect. Many retirees find that their RMDs create taxable income they don’t need for daily expenses. A QCD allows you to:

• Satisfy your RMD while supporting a charitable cause.
• Lower your taxable income, which may also reduce the impact on Medicare premiums or Social Security taxation.
• Align your giving with your broader retirement strategy.

Why year-end is an ideal time for QCDs

The last quarter of the year is often when retirees finalize their RMDs and plan charitable contributions. Completing a QCD before December 31st ensures it counts toward your RMD for that tax year. It’s also a way to make a meaningful impact during the holiday season, when many nonprofits rely on increased giving.

Points to remember

• You must be at Required Minimum Distribution age.
• The funds must transfer directly from the IRA custodian to the charity.
• Keep documentation for tax reporting purposes

Bringing it all together

QCDs can help retirees integrate philanthropy into their retirement strategy while addressing year-end tax considerations. By coordinating charitable giving with required distributions, you can help simplify your planning and support the organizations that matter most.

At Wojcik, Folk & Associates, we help individuals and families make decisions that can align with their long-term vision. If you’re considering a QCD this year, our team can work together with you and your CPA to help ensure your giving fits seamlessly into your overall plan.