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RMD Planning for Clients Who Don’t Need Their RMD

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Required minimum distributions can feel like an obligation clients would rather avoid. But for the right client, an RMD could help accomplish other important financial goals.
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There’s a good chance some clients won’t be thrilled when required minimum distributions (RMDs) begin.

They’ve spent decades building tax-deferred retirement savings. Then, at RMD age, the IRS requires them to begin taking money out — whether they need the income or not.

For clients who rely on those withdrawals for living expenses, that may not be an issue.

But what about the client who doesn’t need the money?

Before automatically sending the RMD to their bank account, there may be another question worth asking:

Could that required distribution help accomplish something else that matters to them?

For clients with charitable giving goals, the answer may be yes.

It’s important to understand what clients want to accomplish with their money. If charitable giving is one of those goals, a qualified charitable distribution may be a strategy worth considering as part of a broader goals-based planning conversation.

Turn a Required Distribution Into Charitable Giving Opportunity

A qualified charitable distribution (QCD) allows an IRA owner age 70½ or older to direct money from an eligible IRA directly to a qualifying charitable organization.

Once the client is subject to RMDs, a QCD can count toward satisfying all or part of that year’s RMD. And because a qualifying QCD is generally excluded from gross income, it may also help reduce the tax impact associated with taking an otherwise taxable IRA distribution.

For 2026, an individual can make up to $111,000 in QCDs for the year.1

That creates an opportunity for financial professionals to connect what can feel like an unwanted IRS requirement with current client goals.

A client who routinely gives to a church, nonprofit, university, foundation, or other eligible organization may already be writing checks from a bank account each year. Once RMDs start, it may be worth considering whether some of that giving should instead come directly from the IRA.

Why QCD Tax Treatment Matters

Suppose a client takes a taxable RMD, deposits it into a bank account, and then writes a check to charity.

Those are two separate transactions. The IRA distribution is generally included in income, and the charitable gift may provide a deduction only to the extent applicable under the client’s circumstances.

However, a QCD works differently.

When the requirements are met, the money moves directly from the IRA to the eligible charity, and the qualifying amount is excluded from gross income. The client cannot also claim a charitable deduction for that same QCD.

That distinction may matter for clients looking for ways to manage taxable income in retirement.

Where RMD Aggregation May Create Another Opportunity

For some clients, this conversation may fit naturally into a broader RMD strategy.

A client with multiple eligible IRAs does not necessarily have to take the RMD proportionately from every account. IRA RMDs generally may be aggregated, and current rules also permit eligible IRA annuity contracts to be considered under the applicable aggregation rules.

For example, a client may be using a qualified fixed indexed annuity as part of a strategy to satisfy RMD obligations across multiple IRAs rather than automatically taking withdrawals from market-based accounts.

Not every annuity carrier allows QCDs. Guaranty allows QCDs from eligible qualified annuity contracts. For other carriers, be sure to confirm availability and requirements.

If a client is using a qualified FIA to help satisfy aggregated RMDs and doesn’t need the income, a QCD may offer another option: directing some or all of an eligible distribution to charity — helping satisfy the RMD while supporting charitable goals and potentially reducing taxable income.

Which Clients Could Benefit?

As you review clients approaching or already taking RMDs, consider:

  • Which clients don’t need their full RMD for living expenses?
  • Which clients have charitable giving goals?
  • Which clients may benefit from coordinating their RMD, charitable giving, and tax strategy?
For the right client, an RMD they initially didn’t want to take could ultimately help them accomplish more with their wealth.
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Start Having RMD Planning Conversations With Clients

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Clients should consult a qualified tax professional regarding their individual circumstances, QCD eligibility, RMD calculations, and tax treatment.

1 https://www.fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html

Guaranty Income Life Insurance Company does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Guaranty Income Life cannot guarantee that the information herein is accurate, complete, or timely. Guaranty Income Life makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Clients should consult an attorney or tax professional regarding their specific situation.

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