Making Sense of RMDs in 2025: Practical Ways to Manage Taxes and Give Back
As we move into the second half of 2025, now is a good time to review your required minimum distribution (RMD). If you’re 73 or older, the IRS requires you to withdraw a certain amount from your traditional IRA or other retirement accounts this year—whether you want the income or not. And, of course, those withdrawals are taxable.
The good news? With some planning, you can make your RMD more tax-efficient—and even use it to support causes you care about.
How RMDs Work
Your RMD is based on your retirement account balance as of Dec. 31 of the previous year and an IRS life expectancy factor. Over time, that factor decreases, which means your RMD amount (and taxable income) typically increases as you age. While you can’t avoid taking an RMD, you can control how and when you take it.
Qualified Charitable Distributions (QCDs)
A qualified charitable distribution is one of the most effective ways to manage the tax impact of RMDs. If you’re 70½ or older, you can donate up to $108,000 in 2025 directly from your IRA to an eligible charity. When the transfer goes straight from your IRA custodian to the charity, the amount stays out of your taxable income and still counts toward your RMD. Keeping that income off your return can help you stay in a lower tax bracket, reduce potential Medicare premium surcharges, and limit how much of your Social Security benefits may be taxed.
Details matter with QCDs. The funds must move directly from the IRA custodian to the charity. If you withdraw the money and donate it yourself, the IRS won’t count it as a QCD. The charity must meet IRS eligibility rules. You won’t receive a separate charitable deduction for a QCD, but the income exclusion often provides a greater benefit than an itemized deduction would.
Other Tax-Smart Approaches
QCDs are just one option. Some retirees pair them with Roth conversions in lower‑income years to reduce or eliminate future RMDs. Others choose to take their RMD early or later in the year based on expected income and deductions. If you don’t need the distribution for living expenses, you can invest the after‑tax proceeds in a taxable account, contribute to a 529 plan for a grandchild, or incorporate the funds into a broader estate plan.
Bottom Line
An RMD doesn’t have to be just another tax obligation. With strategies such as QCDs, and careful timing or coordination with Roth conversions, you can meet IRS requirements, manage taxable income, and support the organizations and causes that matter to you.
Sources: IRS, Schwab, Fidelity, Wall Street Journal
Joseph P. Marmorato
Private Client Group Advisor
CFP®, CPA