Help reduce taxes on future RMDs: for those that can plan ahead, there are several strategies that can help reduce the tax consequences of RMDs.

Donate to your favorite charity through a QCD or DAF. One of the most tax-efficient ways to manage your RMD is through qualified charitable distributions (QCDs). A QCD allows you to transfer assets directly from your IRA to a qualified charity. The amount transferred counts toward your RMD but is excluded from your taxable income, thereby fulfilling your philanthropic goals while reducing your tax liability.

Another option for tax-efficient gifting is by donating to a donor-advised fund (DAF) sponsor. When you make a charitable contribution to the DAF sponsor, you may be eligible to claim an immediate tax deduction (assuming you itemize your deductions) and can then recommend charitable grants from the fund over time. While you still need to take RMDs, donating to a DAF sponsor may wholly or partially offset the tax impact of those RMDs, depending on the charity you donate to, what you donate, and the size of the donation compared to your adjusted gross income. DAFs also offer several benefits including flexibility, tax-efficient growth potential, and legacy planning.

As always, consult with your financial advisor before making decisions.