'Have More Than You Need? Don't Waste It!'—Suze Orman Reveals How IRA Charitable Gifts Can Cut Taxes And Shrink Your RMDs

Suze Orman wants you to rethink how you give to charity, especially if you're retired and have a healthy savings account. 

In her latest blog post, the financial guru explained the brilliant tax-saving potential of Qualified Charitable Distributions (QCDs). Spoiler alert: This strategy could be a game-changer for retirees who want to support good causes without giving Uncle Sam more than his share.

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"A QCD is a powerful way to lower your taxes while helping the organizations you care about," Orman wrote. Here's how it works: if you're at least 70½ years old, you can donate directly from your Individual Retirement Account (IRA) to a qualifying charity. 

The best part is that the donation doesn't count as taxable income. For 2024, the cap is $105,000 per person; in 2025, it bumps up to $108,000. But there's a catch – you must act fast to meet the Dec. 31 deadline for this tax year.

"This isn't something you want to leave until the last minute," Orman warned. "Reach out to your brokerage as soon as possible because these transfers can take time to process."

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The benefits don't stop at reducing your taxable income. QCDs also help retirees manage pesky Required Minimum Distributions (RMDs). If you've got a traditional IRA, the government requires you to withdraw money annually by age 73 (or 75 if you're turning 75 after 2032). These withdrawals are treated as ordinary income; yes, you pay taxes on every dollar.

But here's where the QCD swoops in to save the day. Orman explains: "If your RMD for 2025 is $20,000 and you donate $8,000 through a QCD, that $8,000 counts toward your RMD but isn't taxable. You only pay taxes on the remaining $12,000." That's less money to the IRS and more for you to keep – or give.

Beyond immediate tax savings, a QCD can shrink your IRA balance, which lowers future RMDs and their associated tax bills. It's a smart long-term move for retirees who want to keep more money in their pockets.

However, Orman makes it clear that this strategy isn't for everyone. "You need to be 100% sure you have more than enough savings to cover your retirement before considering a QCD," she stressed. 

She advises consulting a trusted financial professional to ensure this move aligns with your financial plan.

According to Giving USA, charitable donations in the U.S. hit a record $557 billion in 2023. Also, a study by Fidelity Charitable found that 59% of retirees gave at least $1,000 to charity in 2023, making QCDs an attractive option for those looking to give smarter.

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