Turning 70 does not end the need for tax planning in retirement. A 76-year-old couple withdrew $10,000 a year from an IRA to meet required minimum distributions (RMDs), then donated the money to charity. But because the funds first went to their bank account and they did not itemize deductions, they missed about $2,200 in tax savings in both 2021 and 2022. Their experience shows how the timing of RMDs, charitable gifts and other retirement income can affect a household’s tax bill.
Build RMDs into a broader retirement tax plan
The couple took their RMDs every January to avoid missing the deadline. They did not need the money, so they typically donated the full amount by year-end and kept records of their gifts. They were unaware of qualified charitable distributions (QCDs) and assumed all charitable donations would qualify for a tax deduction.
Eligible IRA owners aged 70½ or older can ask their IRA custodian to send money directly to a qualified charity. A qualifying QCD is excluded from taxable income and can count toward that year’s RMD. For donors who do not need the distribution, a direct transfer may better match their tax objectives than taking the money personally and donating it afterward.
The couple did not itemize deductions, so despite giving $10,000 a year, they did not receive the charitable tax benefit they expected. Keeping donation records does not, by itself, ensure that a gift will reduce a tax bill. RMDs can also factor into withholding decisions: some retirees may choose to have taxes withheld from a distribution rather than make separate estimated tax payments. The right approach depends on each person’s income and tax circumstances.
Roth conversions remain possible after RMDs begin
Another common misconception is that starting RMDs or reaching an older age rules out Roth conversions. There is no age limit for converting funds to a Roth IRA. However, once RMDs apply, account holders must take the required distribution for the year first; the RMD itself cannot be converted to a Roth account.
A conversion decision should take account of potential future taxes for the account holder, a surviving spouse and heirs, rather than focusing only on the current year’s tax bill. In this case, the husband was a retired pastor. If he died first, his wife, Mary, would continue to receive the same pension, but income that had been nearly tax-free would become fully taxable to her. After confirming that the couple had met their RMD requirement, their adviser helped assess how much to convert to a Roth IRA each year, with the aim of giving Mary a source of funds that could be withdrawn tax-free under the applicable distribution rules if her tax circumstances changed.
The order of charitable transfers matters
The issue for the couple was not that they gave to charity, but how the money moved. Once an RMD has been paid into a personal bank account, a later donation from that account cannot be reclassified as a QCD. To qualify, the IRA custodian must send the funds directly to an eligible charity.
RMDs count as taxable income and may increase the taxable portion of Social Security benefits. The article also notes that in 2026, this income could affect whether some taxpayers qualify for an enhanced senior deduction. At the same time, the standard deduction is high enough that many retirees do not itemize, even when they have kept receipts for charitable gifts.
For 2026, taxpayers who do not itemize can claim a charitable deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly. The couple’s annual $10,000 in donations exceeded those limits. Although they had complete records, they did not receive the larger tax benefit they had expected.
Coordinate withdrawals, conversions and giving
RMDs, Roth conversions and charitable donations each have their own rules, but handling them separately can lead to a higher tax bill. RMD amounts are set by the rules; retirees can still plan how they give, manage withholding and choose conversion amounts, while accounting for a spouse’s potential future income and tax changes.
For this couple, the key differences were whether the IRA paid the charity directly and how the RMD was coordinated with Roth conversions. Reaching their 70s did not bring tax planning to an end: annual withdrawals, donations and account conversions can all affect taxable income, the tax treatment of Social Security benefits and the family’s future tax burden.