RMD vs. QCD: Choosing the Most Tax‑Efficient Path

If you’re 70.5 or older and charitably inclined, a Qualified Charitable Distribution (QCD) can satisfy your RMD while keeping income out of AGI. If you need the cash, taking part of your RMD as cash and part as QCD can balance cash‑flow and taxes.

Learn the rules first: QCD Complete 2025 Guide

Quick Decision Tree

1. Do you need the full RMD for living expenses?

• Yes → Take as cash; consider withholding strategy: RMD Withholding vs. Estimates
• No → Go to 2

2. Are you donating to eligible 501(c)(3) charities?

• Yes → Use QCD to satisfy some/all RMD; keep AGI lower (helps IRMAA & SS taxation)
• No → Consider partial cash RMD and charitable giving from taxable cash if desired

3. Are you trying to manage IRMAA/credits this year?

• Yes → Favor QCDs to keep AGI under thresholds: RMDs and IRMAA
• No → Either path; compare cash‑flow needs vs. tax savings

Examples

• Example A: Needs all cash → 100% cash RMD with late‑year withholding
• Example B: Needs half cash, donates rest → 50% QCD + 50% cash RMD
• Example C: Doesn’t need RMD, charitably inclined → 100% QCD

Common Mistakes

• Sending funds to yourself first (not a QCD). Custodian must send directly to charity
• Donor‑advised funds are not eligible for QCDs
• Not keeping acknowledgment letters

FAQs

Can a QCD exceed my RMD?

You can do QCDs above RMD (within the annual limit), but the extra won’t carry forward to future RMDs.

Can I do QCDs from a 401(k)?

Roll to an IRA first; QCDs come from IRAs.

What to Do Next

• Learn QCD rules: QCD Complete Guide
• Coordinate withholding: RMD Withholding vs. Estimated Taxes
• Check IRMAA tiers: RMDs and IRMAA