Helen, Charitable Giving Plan

Every story here is a composite. The planning is real and the lessons are real, but the names and details are blended so no client can be identified. Helen is one of those composites.

Helen is 74, widowed, and one of the most generous people I work with. She gives to her synagogue, a food bank, and a scholarship fund, every year, by personal check, in December, the way her parents did. When she walked me through it she was proud of it, and she should have been. Then I asked her one question that changed how she gives. “Helen, where does the money for those checks come from?”

Her checking account, she said. Which she fed from her IRA withdrawal. Which meant she was doing it the expensive way.

The hidden tax on a good deed

Helen takes a required minimum distribution from her IRA every year, the slice the IRS forces out of a tax-deferred account once you’re past your start age. That distribution lands on her tax return as ordinary income whether she needs it or not. Then she takes some of that already-taxed money and writes her charity checks.

She gets a charitable deduction for the checks, but here’s the catch most people miss. Since the standard deduction got large, Helen, like most retirees, doesn’t itemize. Her giving was producing no tax benefit at all. She was paying full income tax on every dollar that left her IRA, including the dollars going straight to charity. The good deed had a tax attached, and she never saw it.

The one move that fixed it

There’s a tool built for exactly this person: the qualified charitable distribution, or QCD. Once you’re 70½, you can send money directly from your IRA to a qualified charity, and that transfer never appears as taxable income. It also counts toward your required distribution for the year.

Read that again, because it’s the whole game. The QCD doesn’t give Helen a deduction. It does something better. It keeps the money off her tax return entirely. For 2026, she can route up to $111,000 a year this way. She gives the same dollars to the same charities she always has, but now those dollars never get taxed on the way out.

Lower reported income has a second-order payoff Helen hadn’t connected. Her Medicare premiums are set by her income from two years earlier, the surcharge called IRMAA. By pulling her charitable giving out of her taxable income, the QCD can keep her under a premium threshold she was bumping against. Same generosity, smaller tax bill, and possibly a smaller Medicare bill two years later. One change to one habit.

When a fund makes more sense

The QCD is the right default for steady annual giving. But Helen had a second goal: she wanted to make one large gift in honor of her late husband and spread the grants to charities over several years.

For that, we looked at a donor-advised fund, an account you fund now, take the deduction now, and grant out over time. It shines in a high-income year, when a big deductible gift can offset a spike. The art is using the right tool for the right job, and sometimes running a QCD and a fund in the same year so the steady giving stays tax-free while the one-time gift does the heavy lifting on a high-income return.

We mapped both into her plan, and the timing matters most in her first required-distribution years, when the habit she sets tends to stick.

Helen still gives every December. She just stopped paying a tax on her own generosity. The charities never noticed a difference. Her tax return did.