A Planner’s Guide to Charitable Giving: RMDs, Beneficiaries, and Timing

Most people give to charity the same way every year. A check goes out in December, the receipt is archived, and the gift feels finished. The cause is grateful, and there is nothing wrong with a simple check.

Once you are near retirement, though, the account that funds the gift and the month you send it can change how much of your money actually reaches the cause. Fortunately, a little planning often sends more to the charity and less to the IRS on the very same gift.

How a Qualified Charitable Distribution Turns Your RMD Into a Gift

Every traditional IRA comes with a bill that eventually comes due. Once you reach the age when the IRS requires you to start drawing down the account, you must take a Required Minimum Distribution [RMD] each year. The IRS treats that money as ordinary income. For a generous retiree, those forced withdrawals can raise your tax bill even in a year when you meant to give much of the money away.

A Qualified Charitable Distribution [QCD] turns that obligation into a gift. From age 70½, you can send money straight from a traditional IRA to a qualified charity. In 2026 the limit is $111,000 per person, or $222,000 for a couple who each give from their own account. The transfer counts toward your RMD, yet it never adds to your taxable income.

A QCD is an exclusion from income, not a deduction, so it lowers your adjusted gross income [AGI] whether or not you itemize. A lower income can ease the tax on your Social Security benefits and help hold down the Medicare premium surcharges that begin at higher incomes. A written check to the same charity does none of this.

Recent tax changes make this move even more valuable. The higher standard deduction now keeps most retirees from itemizing at all. Non-itemizers can deduct up to $1,000 in cash gifts, or $2,000 for a couple, but no more – so a larger donation brings them no further break. A new rule for 2026 also limits the charitable deduction for the people who still do itemize. Because a QCD lowers your AGI directly, it sidesteps both problems.

There is a second advantage to early giving through a QCD. You can start these gifts at 70½ – a few years before RMDs even begin. So, every dollar you move out now lowers the balance the IRS will later force you to withdraw. Use this method of giving for several years and you can shrink the future tax bill.

The right account for a lifetime gift is only part of a good plan. The next question is who should receive what remains when you are gone.

Why an IRA Is Often the Most Tax-Efficient Asset to Leave to Charity

Retirement accounts do not pass through your will. Instead, a beneficiary designation on the account decides who inherits it – no matter what your other documents say. This fact turns beneficiary choices from family matters into planning decisions, and choosing the right beneficiary for each account can make a significant difference in how much your chosen charity receives.

A traditional IRA is one of the most heavily taxed things you can leave to a person. Under the SECURE Act, most non-spouse heirs must empty an inherited IRA within 10 years and pay ordinary income tax on every dollar they withdraw. Those withdrawals often occur in their peak earning years – when their tax rate is already high. So, a large IRA can reach your children with a sizable share lost to tax.

A charity sits on the other side of the math. It owes no income tax, so a charity you name as beneficiary of an IRA receives the full account – 100 cents on the dollar. The efficient plan follows from there. You leave the tax-heavy IRA to charity, and you leave your children assets that get a step-up in basis. Then, a brokerage account or a home passes to your heirs with its built-in gains wiped clean at your death.

The difference between those two paths is easy to see once you put numbers on it. The chart below follows a single $100,000 traditional IRA to two very different destinations.

In the example, you can see that a charity keeps the full balance of the inherited IRA while regular heirs are subject to taxation. The lesson is not that you should give more, but that the same generosity can travel a smarter route. Once you have chosen what to give and who should receive it, one question is left – when to act.

Why Waiting Until December Can Undercut Your Gift

Charitable giving crowds into the final weeks of the year, alongside the pile of financial tasks that stack up in December. The instinct is understandable, yet a rushed gift is where good intentions meet hard deadlines. There are two traps that you should be careful to avoid.

The first is the calendar itself. A QCD must leave your account by December 31, and there is no grace period after that date. Custodians need time to move the money, so a gift that was initiated too late can slip into the next tax year and miss the RMD you meant it to cover.

The second trap is quieter and costs more. The first dollars you take from an IRA in a year count toward your RMD, so the order of your withdrawals matters. Take your full RMD in cash in the spring, then make a QCD in December, and the gift can no longer erase that income – you have already taken it. To let a QCD satisfy your RMD, the gift has to come first.

Both traps can be avoided by planning early. Map your giving in advance, and you can line up each QCD before you ever touch the account. You can also steer a larger gift into a year when it does the most for your tax bill. This is the kind of coordination an experienced financial advisor handles as a matter of course, so the gift you intend is the gift that is received.

Plan Your Charitable Giving With Brookstone Wealth Management

At Brookstone Wealth Management, our team of tax, legal, and investment professionals works together to make your giving as efficient as it is generous. We can model how a Qualified Charitable Distribution changes your income, review the beneficiaries on your accounts, and set the timing so each gift applies in the right year. The result is more support for the causes that matter to you and less lost along the way.

This kind of coordination is one part of our comprehensive wealth management program, Financial Fingerprint^®. We built it over decades of guiding clients toward their goals, and it adapts as your circumstances change. With Financial Fingerprint^®, you can bring every part of your financial life into balance, from a single year-end gift to a lifetime plan for your legacy.

Your situation is your own, and a short conversation is the best place to begin. Contact us today to get started with your Financial Fingerprint^®.