Key Points
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You can avoid RMDs by doing a qualified charitable distribution (QCD).
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If you withdraw the funds yourself first, you cannot count the distribution as a QCD.
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Act soon to complete your QCD before the RMD deadline.
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Required minimum distributions (RMDs) aren’t always a big deal. If you’ve already withdrawn more than the IRS requires to cover your living expenses, you’ve got nothing to worry about. But if you’re withdrawing funds from your account specifically to avoid the 25% penalty for failing to take your RMDs, you might have a problem.
Your withdrawals will increase your tax bill, and if you’re nearing the top of your current tax bracket, they could push you up into the next one. But there is a way to avoid this.
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How to use a QCD to avoid a higher 2026 tax bill
The IRS allows you to substitute a qualified charitable distribution (QCD) for an RMD if you prefer. A QCD is a donation to a qualifying tax-exempt organization made from your retirement account funds. Done correctly, it fulfills your RMD requirement without raising your tax bill.
The donation must take place during the year for which it’s intended. If you want to make a 2026 QCD, you must complete it before Dec. 31.
Your first step is to decide which organization you want to donate to. You can donate to more than one if you prefer. Decide how much you want to give to each, and then contact your plan administrator to let them know what you want to do.
If you withdraw the funds from your retirement accounts yourself, it won’t qualify as a QCD, even if you donate every penny to the charity. You would have the option to write it off as a charitable deduction, though.
For a true QCD, you must have the plan administrator either forward the funds to the organization on your behalf or cut you a check in the organization’s name, which you can forward yourself. This process can take time, so don’t wait until the final weeks of the year to get started.
Don’t take more than you have to for RMDs
If you’re trying to keep your tax bill to a minimum and hold on to as much of your savings as you can, withdraw only as much from your retirement accounts as you’re legally required to. You can skip RMDs from Roth accounts and your current 401(k) if you’re still working and own less than 5% of the company.
Check with your plan administrator to learn how much you’re legally required to withdraw from each of your other accounts. Make sure to complete the process before the year’s end.
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