Retirement Literacy Foundation · Educational Guide

What to Do With RMD Money You Don't Need

Q: Do I have to spend my required minimum distribution?

No. Once you reach 73 you must withdraw your RMD from tax-deferred accounts and pay income tax on it, but there is no rule that you spend it. You can reinvest it in a taxable brokerage account, give it to charity, fund a Roth if you have earned income, gift it to family, or reposition it — you just can't leave it in the original IRA.

Q: What is a Qualified Charitable Distribution (QCD)?

A QCD lets someone age 70½ or older send up to $108,000 (2025 limit, indexed) directly from an IRA to a qualified charity. The amount counts toward your RMD but is excluded from your taxable income entirely — making it the most tax-efficient way to handle an RMD you don't need, since it never shows up as income.

Q: Can I put my RMD into a Roth IRA?

You cannot roll an RMD directly into a Roth, but if you (or a spouse) have earned income, you can use RMD cash to fund a Roth IRA contribution for the year. That moves the money into a tax-free account with no future RMDs of its own.

Short answer: Once you reach 73 you must take your required minimum distribution — but you don't have to spend it. If you don't need the money, the common moves are: reinvest it in a taxable brokerage account, give it to charity via a Qualified Charitable Distribution (QCD) — which is tax-free and still counts toward your RMD, fund a Roth IRA if you have earned income, gift it to children or a 529 plan, or reposition it into vehicles that lower future RMDs.

Five things to do with an RMD you don't need

Option	What it does	Tax effect	Best for
Reinvest in a taxable brokerage account	Keeps the money invested and liquid	You still owe tax on the RMD; future growth is taxed as gains/dividends	Staying invested with full access
Qualified Charitable Distribution (QCD)	Sends up to $108k straight from the IRA to charity	Excluded from income entirely — the most tax-efficient move	Charitably inclined retirees
Fund a Roth IRA	Moves cash into a tax-free account with no RMDs	RMD is taxed once; Roth growth is tax-free afterward	Those with earned income
Gift to children or a 529 plan	Passes wealth or funds grandkids' education now	RMD taxed to you; gifts under the annual limit are gift-tax-free	Family legacy goals
Reposition to lower future RMDs	Shifts assets into vehicles with smaller or no RMDs	Depends on the vehicle; can shrink next year's taxable RMD	Cutting future tax drag

Figures reflect 2025–2026 rules (QCD limit is indexed annually); your options depend on your age, income, and account types. Run your own number below.

The QCD is the most tax-efficient move

If you give to charity anyway, a Qualified Charitable Distribution is usually the single best thing to do with an RMD you don't need. Once you're 70½ or older, you can direct up to $108,000 (2025 limit, indexed for inflation) straight from your IRA to a qualified charity. The magic is that the money counts toward your RMD but never lands on your tax return as income. Because it's excluded rather than deducted, it can also lower income-based costs like Medicare IRMAA surcharges and the taxation of your Social Security — benefits an ordinary write-a-check donation can't match.

Repositioning to shrink next year's RMD

Every dollar you leave in a traditional IRA becomes part of next year's required distribution, so an RMD you don't need is a signal that your future RMDs may keep climbing. Some retirees use the money — or a broader strategy of Roth conversions and repositioning — to move assets out of accounts that force taxable withdrawals and into vehicles with smaller or no lifetime RMDs. Done gradually, this can flatten the tax spikes that hit later in retirement and leave heirs a cleaner inheritance. The right mix depends on your bracket, so it's worth mapping the numbers before acting.

Not sure what your RMD even is?

Enter your age and account balance — our free RMD Calculator shows the exact amount you're required to take this year, so you can plan what to do with it.

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Frequently asked questions

Do I have to spend my required minimum distribution?

No. You must withdraw it from the IRA and pay income tax on it once you turn 73, but nothing requires you to spend it. You can reinvest it, donate it via a QCD, fund a Roth if you have earned income, or gift it — you simply can't leave it in the original tax-deferred account.

What is a Qualified Charitable Distribution (QCD)?

It's a transfer of up to $108,000 (2025 limit, indexed) sent directly from your IRA to a qualified charity once you're 70½ or older. It counts toward your RMD but is excluded from your taxable income — making it the most tax-efficient way to handle an RMD you don't need.

Can I put my RMD into a Roth IRA?

Not as a direct rollover. But if you or your spouse have earned income, you can use RMD cash to make a Roth IRA contribution for the year, moving the money into a tax-free account that has no RMDs of its own.

The Retirement Literacy Foundation is a 501(c)(3) non-profit. This guide is general financial education, not individualized investment, tax, or insurance advice. Figures are illustrative and change with tax law, interest rates, and your personal situation. Consider speaking with a licensed professional before making decisions.