{
  "id": 15004659,
  "title": "RMDs Don't Have to Bring a Higher Tax Bill. Here's the Legal Loophole.",
  "url": "https://urgent.news/2026/10/16/rmds-dont-have-to-bring-a-higher-tax-bill-heres-the-legal-loophole",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-16T17:00:00.000Z",
  "source": {
    "name": "Motley Fool",
    "slug": "motley-fool",
    "url": "https://www.fool.com/retirement/2026/10/16/rmds-dont-have-to-bring-a-higher-tax-bill-heres-th/?source=iedfolrf0000001"
  },
  "original_language": "en",
  "account": "Required minimum distributions (RMDs) may not always result in a higher tax bill, depending on your circumstances. If you have already withdrawn more funds than necessary to cover your living expenses, there is no concern. However, if you are withdrawing funds specifically to avoid a 25% penalty for not taking your RMDs, this strategy could backfire. Withdrawals will increase your tax bill and potentially push you into a higher tax bracket. Nevertheless, there is a legal loophole that allows you to avoid this issue by substituting a qualified charitable distribution (QCD) for an RMD. A QCD is a donation to a tax-exempt organization made from your retirement account funds, which satisfies your RMD requirement without raising your tax bill. To execute a QCD, you must make the donation during the year for which it's intended, before December 31. Start by selecting the organization to receive the donation, which can be multiple organizations. Then, inform your plan administrator of your decision. It is crucial to note that withdrawing funds from your retirement accounts yourself does not qualify as a QCD, even if all proceeds are donated to charity; you could still claim a charitable deduction. For a legitimate QCD, the plan administrator must either forward the funds to the organization or send you a check in the organization's name, which you can then forward. This process may take time, so starting early is advisable. To minimize your tax bill and retain your savings, withdraw only the amount you are legally obligated to from your retirement accounts. Roth accounts and your current 401(k) if you are still employed and own less than 5% of the company are exempt from RMDs. Ensure you complete the QCD process before the end of the year to avoid any penalties.",
  "summary": "It won't stop you from handing over some of your savings, but it could make tax time a bit easier.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}