How to Save on RMD Taxes Through Charitable Giving

How to Save on RMD Taxes Through Charitable Giving

By Karla Wallack, Executive Director, Affinity Foundation

If you’re retired and have an IRA or 401(k), you’re most likely aware that you have a required minimum distribution (RMD) every year after a certain age. This past year, as a result of the COVID-19 pandemic and CARES Act, the RMD for IRAs was temporarily suspended, but this suspension has now lapsed1. What this means is that if you turned 70 ½ before January 1, 2020, or you turned 72 after that date, you will have to take out a minimum amount of money every year, and this money will under most circumstances be taxable. You can find out what you’ll need to take out of your IRA each year by using an RMD calculator2. But is there an alternative to taking out money and then handing a portion over to Uncle Sam? Yes, there is: direct charitable giving from your IRA. And at a time when so many people are in need, it’s a great way to minimize tax liability while doing good.

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Here’s how it works. You can donate up to $100,000 directly from your IRA within a given year to a charitable or non-profit organization, and the gift will be 100% tax-free. This ensures that your money is going exactly to the cause where you want it to go, whether you want to help an animal charity, needy people abroad or a community-based organization like the Affinity Foundation, which supports local grassroots charities in the local tristate area.

Before your write your check, however, there are a few things to remember. First, this only works for IRAs, not 401(k)s. If you have a 401(k), you won’t be able to donate money tax-free from your account to satisfy RMD obligations. To learn more about differences between retirement plans, contact your tax professional or an Affinity financial advisor. Second, you need to donate directly from your IRA to your charity of choice. If you withdraw funds and then write a check to your non-profit organization, you’re still liable to pay taxes on the withdrawal (though you would be able to write some of the donation off your taxes; to find out which action is more beneficial from a tax standpoint, contact your tax professional). Finally, remember that if your primary purpose is to minimize tax obligations on RMDs, the rules have changed so that if you turned 70 ½ after January 1, 2020 but haven’t turned 72 yet, you’re not actually obligated to make an RMD at all. But this is something to keep in mind for when you do turn 72.

As the director of a charitable foundation, I know first-hand how much people in the community are in need these days, and how much those who have the means to do so are wanting to help. Direct charitable giving from your IRA to fulfill RMD requirements is a great way to combine doing good with a smart financial decision.


This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from

2 Retrieved from