Start Your RMD Plan in January: A Smarter Path to Charitable Giving - Heritage Wealth Advisors

Required Minimum Distributions (RMDs) are predictable on paper, but often far less orderly in execution. While the calculation itself is straightforward, a smooth outcome depends on starting early, before calendars fill up and custodian timelines become constrained. When planning is delayed, frustration often follows, and questions about timing surface.

A simple way to de-risk the process (and improve tax outcomes when charitable giving is part of your plan) is to start in January, not December. Early planning gives you time to coordinate with your advisor, align cash flow and withholding, and avoid the year-end bottleneck that can derail even the best intentions.

Why January planning matters

Starting early is less about urgency and more about control. It gives you the operational runway to make decisions thoughtfully instead of reactively.

Benefits of early planning:

• More time to coordinate across your advisor, CPA, custodian, and charities.

• Better cash-flow management, including withholding and distribution pacing.

• Fewer processing surprises, like custodian cutoffs, charity deposit timelines, and holiday mail delays.

Think of it as good governance: clean process, fewer exceptions, better outcomes.

Market timing vs. reality

Here is the reality check: your RMD is generally based on your prior year IRA balance (as of December 31). Waiting until December does not change the required amount, it just compresses the timeline.

Yes, delaying keeps assets invested longer. But for many households, especially when the RMD is relatively modest, the potential benefit is often outweighed by:

• Missed processing windows

• Rushed decisions about where funds should go

• Accidental tax inefficiencies (like taking taxable income you did not actually need)

The tax code loves two things: deadlines and fine print. December is when both get extra enthusiastic.

The tax perspective: why QCDs are a power move

If charitable giving is part of your plan, a Qualified Charitable Distribution (QCD) can be one of the most efficient tools available.

A QCD allows IRA owners age 70½ or older to donate directly from an IRA to an eligible public charity and have that amount excluded from taxable income, while also satisfying all or part of the RMD.

QCD limits (and why they matter)

2025 limit: $108,000 per person

2026 limit: $111,000 per person

Why clients love QCDs

• Chance to make your annual “giving society” donations to organizations you care most about

• Lower AGI can also help with phaseouts that are AGI-driven

• QCDs can be especially valuable for retirees who do not itemize because the benefit comes through income exclusion rather than relying on Schedule A.

QCD rules that matter in the real world

• Direct transfer required: IRA to charity (not IRA to you to charity)

• Eligible charities are generally public 501(c)(3)s and not donor-advised funds or private foundations

• To count as a QCD for a given tax year, the transaction needs to be completed by December 31. With custodian-issued QCD checks, that means the check is drawn directly from the IRA and delivered to the charity by year-end. If you’re using IRA checkwriting, the cleanest approach is to have the charity deposit the check before December 31 to avoid any year-end timing surprises.

A quiet-but-critical tax reporting note (aka: “keep receipts”)

Generally, full distribution from an IRA is reported on Form 1040 and reflects the QCD exclusion per the instructions.

Also worth noting: the IRS added distribution Code “Y” as a QCD indicator for 2025 Forms 1099-R, but for 2025 the IRS has said use of Code Y is optional, so custodian reporting may be inconsistent. Translation: even if your 1099-R doesn’t clearly flag the QCD, the paperwork still does the heavy lifting. Heritage maintains an internal tracker for every QCD we help process so we can reconcile year-end totals and ensure your tax reporting is clean and accurate.

January checklist

This checklist isn’t meant to be a DIY assignment. It’s a conversation framework we use at Heritage to structure the planning process while leaving space to clarify what matters most to you and which causes are closest to your heart.

• Map your giving calendar (which charities, what timing, what amounts)

• Confirm QCD eligibility and target amounts (age 70½+, IRA source, charity eligibility)

• Review withholding and cash needs (especially if only part of the RMD will be a QCD)

• Schedule early distributions to avoid the December processing pileup

Most common pitfall to avoid

Missing the December 31 completion window. In the tax world, “close enough” is a myth and late is simply next year.

Bottom line

January is where the leverage lives: more options, cleaner execution, and a tighter tax outcome. If charitable giving is part of your plan, QCDs can help you support the causes you care about while keeping taxable income (and its ripple effects) in check.

Ready to start? Contact your Heritage advisor to schedule a beginning-of-year RMD and QCD planning session. We will help you align your charitable goals and keep your tax strategy on track. If you are looking for philanthropic inspiration, consider following our podcast, Philanthropy in Focus, on Spotify or YouTube.