RMDs and QCDs: Turning a Tax Obligation into a Planning Opportunity

Required Minimum Distributions (RMDs) are one of those rules that quietly arrive later in life. They can have an outsized impact on taxes, cash flow, and charitable planning if left unattended.

For high-net-worth families, RMDs aren’t just something to “check the box” on. Done thoughtfully, they can be reshaped into a strategic tool—especially through Qualified Charitable Distributions (QCDs).

The RMD Basics (Quick Refresher)

When do RMDs begin?

For individuals born in 1959 or earlier, RMDs must begin at age 73. Under current law, those born in 1960 or later will be required to take RMDs at age 75.

Which accounts require RMDs?

• Traditional IRAs
• Rollover IRAs\
• SEP and SIMPLE IRAs
• Most employer retirement plans (401(k), 403(b), etc.)
• Inherited retirement accounts

Which accounts do not require RMDs?

• Roth IRAs during the owner’s lifetime
• Taxable investment accounts
• HSAs

When can RMDs be delayed?

If you are still working and own less than 5% of the company, you may be able to delay RMDs from your current employer’s retirement plan.

Be careful, though: if you have retirement accounts from prior employers or in rollover IRAs, those accounts likely still require distributions, even if you are still working.

How can RMDs be taken?

• Cash distributions
• In-kind transfers (securities moved to a taxable account)
• Charitable distributions (QCDs)

That last option is where planning gets interesting.

The Power of Qualified Charitable Distributions (QCDs)

A QCD allows individuals age 70 1/2 or older to send up to $111,000 per year (2026) directly from an IRA to a qualified charity.

The key advantage?

The distribution counts toward your RMD but does not count as taxable income.

For many high-net-worth households, that distinction matters far more than a deduction.

When QCDs Make Sense

QCDs tend to shine when:

• You’re already charitably inclined
  If giving is part of your annual plan, a QCD is often the most tax-efficient funding source.
• You don’t itemize deductions
  The QCD bypasses the deduction question entirely by keeping income off the return.
• You want to reduce AGI, not just taxes
  Lower adjusted gross income can reduce:
  Medicare IRMAA surcharges
  Taxation of Social Security
  Exposure to certain phase-outs and surtaxes
• Your RMD exceeds your spending needs
  Using excess RMDs for charity avoids “forced income” that simply compounds tax drag.

When QCDs Don’t Make Sense

Despite their appeal, QCDs aren’t universally optimal.

They may not be the right choice if:

• You benefit significantly from itemized deductions
  Especially if large charitable gifts are paired with other deductions, donating appreciated securities from a taxable account may be more effective.
• You don’t have charitable intent
  If charity isn’t a goal, other RMD strategies may be a better fit.

The Bigger Picture

For high-net-worth investors, QCDs sit at the intersection of tax planning, charitable intent, and income management. Used correctly, they can reduce taxes today while supporting causes that matter.

‍

For disclosures, please click here.