Skip the RMD Tax Trap: Here's What the IRS Doesn't Want You to Know

Turns out the government has a loophole built into required minimum distributions (RMDs)—and it’s completely legal.

Once you hit 73, the IRS forces you to withdraw money from retirement accounts whether you need it or not. Miss the deadline? That’s a 25% penalty. Take too much? Welcome to a fatter tax bill.

But here’s the play: Qualified Charitable Distributions (QCDs). You can donate up to $108,000 directly to charity in 2025, and it counts as your RMD without adding a single dollar to your taxable income. Translation? You fulfill the requirement, help causes you care about, and keep your tax bracket intact.

The catch: The money has to go straight from your plan administrator to the charity. Withdraw it first, and you lose the tax advantage—you’re just making a regular donation.

Example: 75-year-old with a $250k 401(k) owes about $10,163 in RMD. Instead of taking that cash and triggering taxes, request your plan administrator send it directly to a qualifying nonprofit. Same amount out, zero extra tax hit.

Deadline’s Dec. 31, 2025 (April 1, 2026 if this is your first RMD). Don’t sleep on it.