Smart Giving Strategies for the Well-Seasoned Over 70½: Maximize Tax Benefits with Qualified Charitable Distributions (QCDs)

What You Will Learn

This article explores how those over the age of 70½ have tools to strategically maximize their charitable giving while reducing taxes. You’ll learn how Qualified Charitable Distributions (QCDs) can offset Required Minimum Distributions (RMDs), lower taxable income, and create opportunities to enhance your broader financial goals. By understanding this tool, you’ll see how to align your philanthropic efforts with your wealth management strategy to ensure a tax-efficient and impactful approach to giving.

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Optimizing Charitable Giving with QCDs

Congratulations—you’ve achieved financial success. Through your hard work, smart decisions, and dedication, you’ve positioned yourself to not only secure your family’s future but also make a meaningful difference in the lives of others.

For individuals aged 70½ and older, a QCD offers a unique and powerful way to give back to the causes you care about while significantly reducing your tax burden. QCDs allow you to make tax-free charitable donations directly from your traditional IRA, providing a highly efficient way to align your giving with your financial and legacy planning goals.

At Cogent Strategic Wealth, Michael Evans and his team work closely with clients to develop highly personalized charitable giving strategies that allow them to give more effectively and efficiently. Drawing on his own family’s experiences with charitable giving, Michael helps clients navigate the complexities of tools like QCDs and DAFs, ensuring their generosity leaves a lasting legacy. Below, we explore how these strategies can be integrated into a cohesive wealth management plan.

Important Disclaimer 

This article is for educational purposes only and should not be considered financial, tax, or legal advice. Before running off and implementing any strategy discussed here, always consult with your fee-only, independent fiduciary wealth manager (if you are fortunate enough to work with one), as well as your tax and estate planning experts, to ensure it aligns with your unique financial goals and circumstances.

Here’s how a QCD strategy works:

Qualified Charitable Distribution (QCDs) in Action

QCDs enable individuals aged 70½ or older to donate up to $105,000 in 2024 (increasing to $108,000 in 2025) directly from their traditional IRA to qualified charities. Couples can each contribute up to these limits, doubling their potential impact.

A key benefit of QCDs is that the amount donated is excluded from taxable income, which helps reduce Adjusted Gross Income (AGI). This reduction can have ripple effects, such as:

• Lowering exposure to the 3.8% Net Investment Income Tax (NIIT).
• Reducing Medicare IRMAA surcharges.
• Increasing allowable deductions for medical expenses.
• Optimizing the efficiency of your passing on your legacy.

Furthermore, QCDs can be used to offset Required Minimum Distributions (RMDs), making them particularly valuable for investors who do not need their full RMD for living expenses. By offsetting taxable RMD income with QCDs, you can reduce your tax liability while making a significant charitable impact.

Super Simplified, Hypothetical Example: Tax Savings with a QCD

Let’s look at how a QCD can work in practice:

Scenario: You have a RMD of $100,000 and you decide to use a $50,000 QCD to donate directly to a qualified charity or charities. You have other income which places you in the 32% federal income tax bracket. We will ignore state income taxes in this example as we work with clients throughout the U.S.

Scenario 1: Without a QCD

• RMD included in taxable income: $100,000
• Assuming you are in the 32% federal tax bracket:
  • Federal taxes owed on the RMD: $32,000 (32% of $100,000)

Scenario 2: With a $50,000 QCD

• Taxable RMD after the QCD: $50,000
  • The $50,000 donated via the QCD is excluded from taxable income.
• Taxes owed on the remaining $50,000 RMD:
  • $16,000 (32% of $50,000)

Tax Savings

• Taxes without a QCD: $32,000
• Taxes with a QCD: $16,000
• Tax savings from the $50,000 QCD: $16,000

The Real Cost of Giving

By using the QCD, the $50,000 charitable gift effectively costs you only $34,000:

• Total gift: $50,000
• Minus tax savings: $16,000
• Net cost of the gift: $34,000

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Additional Benefits of QCDs

QCDs don’t just reduce taxes; they also provide broader financial advantages:

1. Lower AGI: By excluding the $50,000 QCD from AGI, you may also reduce:
   • Exposure to the 3.8% Net Investment Income Tax (NIIT).
   • Medicare IRMAA surcharges.
   • Thresholds for medical expense deductions.
2. Charitable Impact: The QCD allows you to direct your wealth toward meaningful causes while simultaneously improving your tax efficiency.
3. Roth Conversion Opportunities: Lowering taxable RMD income with a QCD can create room within your tax bracket to execute Roth IRA conversions with minimal additional tax liability.

For many of our clients, passing wealth efficiently to heirs is a top priority, and creating a pool of tax-free assets is a key component of that strategy. By offsetting taxable RMD income with charitable contributions through QCDs, you can strategically optimize your tax situation while setting up a more favorable financial legacy for your family.

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For Charitable Giving Beyond QCD Limits

If your charitable giving exceeds the $108,000 QCD limit in 2025, creating a strategy which pairs QCDs with using a Donor-Advised Fund (DAF) can open up even more possibilities. While QCDs allow you to donate directly from your IRA, a DAF enables you to contribute additional funds—such as appreciated stocks, mutual funds, and ETFs from your taxable accounts—to amplify your giving.

This combination allows you to maximize the tax benefits of both strategies, reduce your overall tax burden, and create a flexible, long-term charitable giving plan for supporting your favorite causes. To learn more of Donor Advised Funds, see the resources section of our website on DAFs here. 

Are QCDs and DAFs Right for You? 

Any of these strategies only should be applied if you have charitable intent obviously. If you’d like to explore how Cogent assists clients in their thinking on how you can develop a charitable giving strategy, see our article on 7 Simple Tips to Magnify Your Charitable Gifts and Make Them Even More Impactful.

Leading by Example: Charitable Giving at Cogent Strategic Wealth

At Cogent Strategic Wealth, we don’t just advise clients on how to optimize their charitable impact—we actively live these principles ourselves.

“As I live this great life as both a successful entrepreneur and a wealth manager for a great group of smart and fun clients, I get a whole lot of joy in making my own and our client family’s charitable dollars go so much further. My own definition of wealth is not in just the personal freedom and independence it secures for us, but in how it can uplift others around us. It is amazing the tangible and meaningful change I have witnessed in our community from the generosity of Cogent families. Helping those who have created so much abundance follow through on their desire to create a positive impact on others is one of the most fulfilling things I do.”

— Michael Evans, Founder of Cogent Strategic Wealth

To embody these values, Cogent commits a significant portion of our annual profits to local and national charities in place of client gifts. Additionally, Michael and his wife Colleen personally prioritize giving each year utilizing the benefits of DAFs extensively, guided by our shared belief that meaningful change starts at home.

Why Work with Cogent Strategic Wealth?

At Cogent Strategic Wealth, we’ve helped clients integrate QCDs and DAFs into their charitable giving plans for decades, enabling them to maximize their impact while optimizing their financial strategies. 

By planning ahead, you can “do well while doing good,” ensuring your charitable donations support the causes you care about most while aligning with your broader wealth management goals.

If you’re interested in learning more about how an optimized charitable giving strategy could fit into your financial plan, reach out to Michael Evans and his Cogent Team today. Let us help you make your giving as meaningful, impactful and efficient as possible.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Cogent Strategic Wealth provides investment advice only through individualized interactions. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.