If you're 73 writing checks to your church, you're leaving taxes on the table

If you're over 73 years old and you're donating to charity every year, you're probably losing hundreds of thousands of dollars without even realizing it. Here's the problem. Every dollar you donate comes from money that's already been taxed, but there's a little-known IRS provision lets you donate tax-free and almost nobody uses it. When you coordinate that with Roth conversions, it can save you hundreds of thousands of dollars over your lifetime. So look, we've helped families avoid over $9 billion in projected tax payments by getting this structure right. Among other things. And in this video, I'm going to share what we've learned from working with thousands of IRA millionaires and their CPAs. So here are the 3 big takeaways for today. First, the smart way IRA millionaires handle charitable giving. Second, how to coordinate it with Roth conversions so you're not leaving money on the table. And third, if you stay to the end, I'll share an advanced strategy that most advisors really never mention. Okay, let's dive in. If you want to bypass getting taxed on your charitable donations, you're going to want to use something called a qualified charitable distribution, QCD. Here's how it works. Instead of taking your required minimum distribution or your RMD into your personal account first, and then writing a check to the charity, you tell your IRA custodian to send the money directly to the charity. That's it. The custodian writes the check, not you. And when that happens, 3 powerful things occur. 1, the money counts toward your RMD. 2, it never shows up as income on your tax return, and 3, your adjusted gross income stays lower because of that. So picture 2 roads. The first road, your RMD comes out of your IRA and goes through a tax toll booth. Uncle Sam takes their 20%, 30%, or maybe 35%. Then what's left goes to charity. The second road, your RMD goes directly from your IRA to the charity. It bypasses the toll booth completely. Same donation, zero tax. Now, There are some rules. You must be at least 70.5 years old. The money must go directly from the IRA to a qualified charity. And right now you can do that up to $111,000 per year per person. That amount adjusts for inflation each year too. So here's what makes it powerful. Because the money never hits your income, your adjusted gross income stays lower. Lower AGI means lower Medicare premiums, less Social Security is taxed, and possibly keeping deductions you would have otherwise lost. So here's a quick example. Let's say your RMD this year is $80,000 and you're planning to give $20,000 to your church. Well, in the old way, you take the full $80,000 as income, you pay tax on all of it, and then you donate the $20,000. You just paid tax on money you gave away. So the smarter way, send the $20,000 as a QCD, take the other $60,000 as cash, and only pay tax on the $60,000. Same giving, different tax outcome. So here's one critical point. The check must come from your IRA custodian, not from you. If you take the money out first and then try to donate it, it's too late. The toll booth already got you. So call your custodian early in the year, set it up well before December 31st. Don't wait until the last minute because they get inundated with requests. Now, this works beautifully if you're already giving each year, but here's the biggest opportunity most people miss. Charitable planning and Roth conversions. Conversion planning can have an even bigger impact when you do them together, not separately. If you're an IRA millionaire, you likely should be doing Roth conversions. You move money from a pre-tax IRA to a tax-free Roth IRA. That creates taxable income in the year that you do the conversion. Now, most people think, look, I'll do the Roth conversions one year, I'll do the charitable giving another year. Well, that's a mistake. Here's a coordinated strategy. In a year where you're doing a large Roth conversion, you can use charitable giving to offset some of the taxable income. The conversion creates QCDs or large charitable contributions reduce income. They work together that way. Here's an example. You convert $100,000 from your IRA to a Roth. That's $100,000 of taxable income. If you're already giving $30,000 to charity annually, send that $30,000 as a QCD. Now you've got $70,000 of net taxable income instead of $100,000. More money ends up in the Roth. It grows tax-free forever. And you've funded your giving at the same time. This is tax architecture. It's more than simply filing a return. It's designing a strategy that looks at Roth conversions, RMDs, charitable giving, Medicare premiums, Social Security timing, widow or widower brackets, all of it together. The goal is not to pay the least tax this year. The goal is to pay the least tax over your lifetime and maximize your tax-adjusted net worth because $2 million in an IRA at age 85 is not $2 million of spendable money. The IRS still owns a portion of it or claimed a portion of it. There's no one-size-fits-all when it comes to timing sequencing, which is why I put together a free training specifically for you. If you're an IRA millionaire and you want to understand how charitable strategy, Roth conversions, and RMD planning work together, you'll get a lot out of it. It walks through real case studies, real numbers, and how the pieces all fit together. You can join at the link below. Now, I promised an advanced strategy. This isn't for everybody, but if you give significantly to charity or you want more flexibility, this is where donor-advised funds come in. A donor-advised fund, or DAF, is like a charitable taxable savings account. You contribute money, you get the tax deduction in the year you contribute, then you distribute grants to charities out of a checkbook over time. This is powerful in high-income years. You sell a business, or maybe you have a large Roth conversion where you sell real estate, your income spikes. If you're already generous, you can bunch several years of giving into one year, fund the DAF, take the big deduction, offset that income spike, then distribute to charities over the next 5, 10, 15 years, however you want to. It's an important distinction. QCDs must go directly to a charity. They cannot go to a donor-advised fund. Your CPA should run the numbers for your specific situation, but when coordinated properly, this can be a very powerful lever for you to pull. So let's recap. Your generosity is not the problem. The structure is. If you're taking your RMD and then writing checks, you're going through the tax toll booth first. The smarter way is a qualified charitable distribution direct from your IRA to the charity. Bypass the toll booth. Satisfy your RMD. Keep income lower. Larger strategic giving donor advised funds lets you bunch contributions in high-income years. And most importantly, charitable planning should be coordinated with Roth conversion planning. When you look at the full picture, you can save hundreds of thousands over your lifetime. So if you have questions, leave them below. If this was helpful, like and subscribe. But remember, fixing charitable giving is only half the battle. You still need to figure out how to pay the tax bill on your Roth conversions without draining your savings. I break down that math in this next video. This is the missing link. Click here and I'll show you exactly how to use these donations to help offset your conversion tax.