PART 3 OF 4 | PUBLICATION DATE: MONDAY, OCTOBER 19, 2026
Taxes, RMDs, and Generosity: Year-End Decisions With Purpose
"The thoughts of the diligent tend only to plenteousness" - Proverbs 21:5 (KJV)
The final months of the year can create a long list of financial decisions: required minimum distributions, charitable gifts, tax withholding, Roth conversions, capital gains, IRA withdrawals, and portfolio rebalancing. It can be tempting to treat these as separate transactions. A better approach is to view them as parts of one stewardship plan.
Proverbs 21:5 points to the value of diligent planning. In retirement, diligence does not mean obsessing over every tax dollar. It means understanding the rules, considering the tradeoffs, and making decisions before deadlines remove your options.
Know Whether an RMD Applies to You
Required minimum distributions, or RMDs, generally apply to traditional IRAs and many employer retirement plans once the account owner reaches the applicable starting age. Under current law, the applicable age is 73 for people who reach age 73 before 2033, and age 75 for people who reach age 74 after 2032. Roth IRAs and designated Roth accounts in employer plans do not require lifetime RMDs for the original owner, although beneficiaries are subject to separate rules.
For many retirees, the practical question is not only, "How much must I take?" It is also, "How should this distribution fit with the rest of my income and tax plan?" An RMD can affect taxable income, Medicare-related income calculations, charitable planning, and the amount of cash available for spending or reinvestment.
Someone taking a first RMD may be allowed to delay that first distribution until April 1 of the following year, but doing so can result in two taxable RMDs in that next calendar year. That can make the timing decision more important than it first appears.
2026 Tax Changes May Affect the Conversation
Several federal tax rules for 2026 are relevant to retirees and people nearing retirement. The standard deduction for tax year 2026 is $16,100 for single filers and married individuals filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. In addition, eligible taxpayers age 65 or older may qualify for an enhanced senior deduction of up to $6,000 per eligible person for 2026, subject to income-based phaseouts.
These rules can influence decisions such as whether itemizing deductions is likely to help, how much room may exist in a tax bracket, whether a Roth conversion is worth considering, and how charitable giving should be structured. They should be evaluated with the rest of the return rather than in isolation.
Generosity Can Be Part of Tax Planning
For people who are charitably inclined, year-end planning can create opportunities to align generosity with tax efficiency. A qualified charitable distribution, or QCD, allows an IRA owner who is at least age 70 1/2 to direct an eligible distribution from an IRA straight to a qualified charity. For 2026, the annual QCD limit is $111,000 per eligible IRA owner. A properly completed QCD can count toward an RMD and may be excluded from taxable income, although the same amount cannot also be claimed as a charitable deduction.
Beginning with tax year 2026, taxpayers who do not itemize may also be able to claim a federal deduction for certain cash charitable contributions of up to $1,000 for a single filer or $2,000 for a married couple filing jointly. For itemizers, 2026 law also introduced a 0.5% of adjusted gross income floor on charitable contribution deductions, making the timing and method of giving more important to review.
These tax rules should not become the reason for generosity. Scripture frames giving as a matter of the heart and faithful stewardship, not a transaction. But when generosity is already part of the plan, using the available rules wisely may allow those gifts to be made more efficiently.
Consider Withholding Before the Calendar Turns
Retirees sometimes discover late in the year that taxes were not withheld adequately from pensions, Social Security, or IRA withdrawals. A year-end distribution may provide an opportunity to adjust federal or state withholding, depending on the situation. Because withholding from retirement distributions can receive different timing treatment than quarterly estimated payments, this is a topic worth discussing with a tax professional before year-end.
The larger lesson is simple: do not wait until tax filing season to begin tax planning. By then, many decisions for the prior year are already closed. October is a useful time to estimate income, review distributions, coordinate with a CPA, and decide whether any action belongs on the calendar before December 31.
Make the Tax Plan Serve the Life Plan
Taxes matter, but minimizing taxes at all costs is not the goal. A strategy that saves taxes but creates unnecessary risk, limits liquidity, disrupts charitable intentions, or conflicts with family goals may not be a good strategy at all.
Wise stewardship asks a broader question: How can we make tax, distribution, investment, and giving decisions that work together? When those pieces are coordinated, financial planning becomes less about chasing isolated savings and more about using resources purposefully.
How Otium Can Help
Otium Financial Planners can help coordinate year-end RMDs, retirement distributions, investment decisions, charitable giving, and tax-planning opportunities with your broader retirement plan and tax professional. The goal is greater clarity around the decisions that still need attention before December 31, so your resources can be used wisely and support a Full Life.
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