Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
A 74-year-old retired engineer has $1.3 million in his traditional IRA and gives $15,000 a year to his church. For years, he’s taken his required minimum distribution, paid tax on the taxable withdrawal and then written the church a check from his savings account.
At a family dinner, his nephew, who works in financial planning, told him he might be missing a tax-saving opportunity. By sending the donation directly from his IRA instead, he could potentially give the same amount while reducing his taxable income. He had never heard of the rule.
Don’t Miss:
Why His Checks May Not Be Saving Him On Taxes
Many retirees take the standard deduction rather than itemizing. For 2026, the standard deduction for married couples filing jointly is $32,200, with additional standard-deduction amounts available to eligible taxpayers who are 65 or older.
If his itemized deductions don’t exceed the standard deduction available to him, his $15,000 church donation won’t provide an additional federal charitable deduction. Meanwhile, his taxable IRA withdrawals generally increase his taxable income, even if he later gives some of that money away.
His required minimum distribution is also likely to increase as he ages, although the actual amount depends on his account balance, the applicable IRS life-expectancy factor and other circumstances. That can make the tax treatment of his charitable giving increasingly important.
How A Qualified Charitable Distribution Works
The IRS allows IRA owners who are at least 70½ to make qualified charitable distributions, or QCDs, directly from an eligible IRA to a qualifying charity. A properly executed QCD is excluded from taxable income and can count toward the account owner’s required minimum distribution.
The IRS set the 2026 QCD limit at $111,000 per eligible individual. His $15,000 gift is well below that limit. If his wife also has an eligible IRA and is at least 70½, she can make her own qualifying distributions, subject to the same individual limit.
The church must be an eligible charitable organization, and the payment must meet the IRS’s QCD requirements. Gifts to donor-advised funds and certain other organizations do not qualify.
Trending: Real Estate Investing Without Buying A House? This 6-Month Strategy Is Offering 8% APY. Here’s How The Private-Market Investment Works.
What The Switch Could Save Him
If the retiree is in the 22% federal marginal income tax bracket, excluding a $15,000 distribution from taxable income could reduce his federal income tax by as much as $3,300 for that year, assuming the full amount would otherwise be taxable at that rate and the QCD meets all requirements.
Over 10 years, similar annual gifts could represent roughly $33,000 in potential federal income tax savings under those same assumptions. That’s an illustration, not a calculation of what he actually lost: his tax bracket, account withdrawals, charitable deductions and other circumstances may have changed from year to year.
The benefit can extend beyond his regular income tax bill. Lower adjusted gross income may also reduce the portion of his Social Security benefits subject to federal income tax. The Social Security Administration explains that married couples filing jointly may have up to 50% of their benefits subject to tax when their combined income is between $32,000 and $44,000, and up to 85% subject to tax when combined income exceeds $44,000. The exact outcome depends on the household’s income and benefits.
The Medicare And Senior Deduction Ripple Effects
Keeping adjusted gross income lower may also help him avoid higher Medicare premiums. CMS’s 2026 Medicare premium rules set the first income-related surcharge threshold at modified adjusted gross income above $218,000 for joint filers. Medicare generally uses tax-return information from two years earlier to determine these surcharges, so a QCD’s effect on premiums may show up later rather than immediately.
He may also qualify for the new $6,000 enhanced deduction for seniors, available for tax years 2025 through 2028 to eligible taxpayers age 65 and older. The deduction is in addition to the existing additional standard deduction for seniors and is available to eligible taxpayers whether they itemize or take the standard deduction. It phases out when modified adjusted gross income exceeds $150,000 for joint filers.
A QCD that lowers adjusted gross income could help a taxpayer stay below that phaseout threshold or reduce the amount of the deduction lost to the phaseout. Whether it makes a difference for this retiree depends on his household’s income and eligibility.
See Also: What Happens When AI Writes Code It Doesn’t Fully Understand? One Startup Is Building The “Context Layer” Behind The Scenes.
Getting The Mechanics Right
A QCD must be paid directly from the IRA custodian to the eligible charity. If he withdraws the money into his own bank account and then writes the church a check, the IRA withdrawal generally remains taxable; the separate donation may qualify for a deduction only if he meets the applicable charitable-deduction rules.
Most IRA custodians can explain how to arrange a direct charitable payment. He should also obtain and retain the church’s written acknowledgment of the gift, which is generally required to substantiate charitable contributions of $250 or more.
Timing matters, but not quite in the way some retirees assume. The IRS says RMDs generally begin at age 73, and a qualifying QCD can satisfy some or all of the RMD for the year. He does not necessarily have to make the QCD before every other IRA withdrawal. However, a QCD made later in the year won’t retroactively turn an earlier taxable withdrawal into a tax-free distribution. Planning the charitable payment with his custodian before taking withdrawals can help him coordinate the transactions correctly.
Looking At The Bigger Tax Picture
A QCD is one part of retirement tax planning. With $1.3 million in his traditional IRA, the retiree will need to account for future RMDs, taxable income and charitable goals. A financial professional can help him evaluate how those pieces fit together without assuming a QCD is automatically the best choice in every situation.
Finance Advisors offers a no-cost retirement quiz that can connect him with financial professionals who handle charitable giving and retirement withdrawal strategies. A sensible first step is to contact his IRA custodian and ask how to arrange a direct QCD for his next church donation.
Building Wealth Across More Than Just The Market
Building a resilient portfolio means thinking beyond a single asset or market trend. Economic cycles shift, sectors rise and fall, and no one investment performs well in every environment. That’s why many investors look to diversify with platforms that provide access to real estate, fixed-income opportunities, precious metals, and even self-directed retirement accounts. By spreading exposure across multiple asset classes, it becomes easier to manage risk, capture steady returns, and create long-term wealth that isn’t tied to the fortunes of just one company or industry.
EquityMultiple
For accredited investors looking beyond stocks and bonds, EquityMultiple provides access to vetted commercial real estate deals starting at $5,000, with only ~5% of opportunities passing their due diligence process.
Arrived
Backed by Jeff Bezos, Arrived Homes makes real estate investing accessible with a low barrier to entry. Investors can buy fractional shares of single-family rentals and vacation homes starting with as little as $100. This allows everyday investors to diversify into real estate, collect rental income, and build long-term wealth without needing to manage properties directly.
Realberry
For accredited investors looking beyond traditional stocks and bonds, Realberry provides access to institutional-quality real estate investments, including a preferred equity opportunity in the 297-room Hyatt Place Boston Seaport. The firm has invested across multiple property types and markets, with 13 million square feet of real estate across seven U.S. states and $481 million in cumulative distributions paid to investors as of Q4 2025.
Skybound Entertainment
Entertainment franchises can become valuable long-term assets when they successfully expand across multiple platforms. Skybound Entertainment, the company behind The Walking Dead and Invincible, develops original intellectual property that spans comics, television, film, video games, merchandise, and licensing. With more than 250 IPs in its portfolio and a strategy focused on retaining franchise rights while scaling successful stories across media, Skybound offers investors exposure to the growing entertainment and creator economy through a private company rather than traditional public market investments.
American PowerGen
As artificial intelligence drives a surge in electricity demand, reliable power generation is becoming a critical part of the technology ecosystem. American PowerGen is developing natural gas-fired power plants in Texas, a fast-growing market fueled by AI data centers, manufacturing expansion, and population growth. By advancing projects through permitting, fuel supply, and grid interconnection, the company is positioning itself to help meet rising energy needs while offering investors exposure to the infrastructure supporting the next wave of AI and industrial growth.
Bito
As AI coding tools take on more of the work traditionally done by developers, companies are facing new challenges around code quality, context and the rising cost of AI-powered development. Bito is building software designed to help AI coding agents better understand complex codebases while helping companies control AI development costs. Founded by former PubMatic executives, Bito has raised more than $10 million from institutional and individual investors and is now raising additional capital through a Wefunder offering, giving investors an opportunity to invest in a company targeting an emerging need within the rapidly expanding AI software market.
DLP Capital
For accredited investors looking beyond stocks and traditional real estate opportunities, DLP Capital provides access to private real estate strategies focused on workforce housing — homes for essential workers such as teachers, nurses, firefighters, and police officers. With more than $5.5 billion in assets under management and a community of 4,000+ accredited investors, DLP Capital gives investors access to real estate strategies designed around the growing need for housing that working Americans can actually afford.
FarmTogether
Farmland has historically held its value through market volatility and delivered returns uncorrelated to stocks and bonds. For accredited investors, FarmTogether offers direct access to high-quality U.S. farmland starting at $15,000 — fully managed, with no landlord headaches.
Fundrise
Private real estate and private credit can add income and stability to a stock-heavy portfolio. Fundrise offers access to diversified private real estate and credit strategies through an easy-to-use platform, with professionally managed portfolios designed to generate passive income and long-term growth.
This article Retiree, 74, Gives His Church $15,000 A Year. One IRA Rule Could Help Him Keep More Of His Money originally appeared on Benzinga.com
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.