Stop Writing Charitable Checks From Your Checking Account

Your IRA May Be a More Tax-Efficient Way to Give

Have you ever written a check to your church, favorite charity, or local nonprofit from your checking account?

If you’re retired, there may be a better way.

Many retirees continue giving exactly as they did during their working years—writing checks from their bank account after they’ve already paid taxes on their retirement income.

For those who qualify, a Qualified Charitable Distribution (QCD) may allow the gift to come directly from an IRA, potentially reducing taxable income while satisfying all or part of an annual Required Minimum Distribution (RMD).

It’s one of the simplest tax strategies available, yet many retirees have never heard of it.

A Simple Example

Imagine your annual Required Minimum Distribution is $20,000.

Every year you also donate $5,000 to your church.

Many retirees do this:

1. Withdraw the full $20,000 from their IRA.
2. Pay income taxes on the entire withdrawal.
3. Write a $5,000 check from their checking account.

A potentially more tax-efficient approach may be:

1. Direct your IRA custodian to send $5,000 directly to your church as a Qualified Charitable Distribution.
2. Withdraw only the remaining $15,000 for yourself.

The charitable gift may never become taxable income in the first place.

Why This Matters

Lower taxable income may help:

• Reduce federal income taxes
• Lower Medicare IRMAA premiums
• Reduce taxation of Social Security benefits
• Satisfy part or all of your Required Minimum Distribution

It’s a strategy that benefits both you and the charity.

Who Qualifies?

Generally:

• You must be at least 70½ years old.
• The gift must come directly from your IRA.
• The charity must qualify under IRS rules.

Not every charitable organization qualifies, so it’s important to verify eligibility before making the transfer. Make sure you understand your Required Minimum Distributions (RMDs): Common Mistakes and How to Avoid Them

Point Wealth Insight

Many retirees focus on where they give but overlook how they give. Qualified Charitable Distributions (QCDs): One of Retirement’s Most Overlooked Tax Strategies

Changing the source of the donation—from your checking account to your IRA—may create meaningful tax savings without changing the amount you donate.

If charitable giving is already part of your retirement plan, it’s worth asking whether you’re giving in the most tax-efficient way.

Ask the Advisor

Before writing your next charitable check, ask:

“Should this donation come directly from my IRA instead?”

The answer could save you taxes while continuing to support the causes that matter most. Medicare IRMAA Explained: Why Your Medicare Premiums May Suddenly Increase

Sources

• Internal Revenue Service – Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs).
• Internal Revenue Service – Qualified Charitable Distribution guidance.
• National Council on Aging – Charitable giving and retirement planning.