Four Purpose-Driven Ways to Use Your IRA RMDs
By Drake Richey
For many business owners and wealth creators in retirement, the IRA is a relic of earlier accumulation — a tax-deferred account that now forces withdrawals you may not need. Whether it’s your own IRA or one you’ve inherited, these distributions are an obligation, but they can also become a tool for purpose, generosity, and legacy that you can thoughtfully deploy.
IRAs are among the least efficient assets to transfer to heirs. Rather than resenting every required distribution, recognize that it represents consistent cash flow you can align with things you really care about — turning “required minimum” into deliberate maximum. Here are four purpose-driven ways to use your IRA RMDs (or inherited IRA) beyond journaling funds to a taxable account:
1.) Spend It and Fund the Life You Intentionally Built
Your IRA is often the least tax-efficient pool of capital you own. Spending from it first allows your brokerage, trust, and Roth assets to compound longer for future generations.
Why it fits your values: Frees you to live fully now while maintaining strategic flexibility across your balance sheet.
Examples:
- Use distributions to fund travel, family experiences, or philanthropic work.
- Cover lifestyle costs so other assets can remain invested with purpose.
2.) Give It Away (Qualified Charitable Distribution — QCD)
Once you reach age 70½, you can give up to $100,000 per year directly from an IRA to qualified 501(c)(3) charities, tax-free. It satisfies all or part of your RMD.¹
Why it fits your values: Converts a tax requirement into an act of generosity — values over valuation.
Examples:
- Support your church, alma mater, or other non-profits in your community.
- Engage family members in selecting recipients to reinforce a culture of giving.
3.) Protect and Multiply (Insurance Planning)
Redirect taxable withdrawals into vehicles that convert a tax-inefficient asset into tax-efficient legacy protection — benefiting family while preserving optionality.
Why it fits your values: Transforms required distributions into leveraged protection that compounds for generations.
Examples:
- Fund life insurance held in an ILIT to offset estate taxes or equalize inheritance.
- Strengthen family liquidity or charitable gift planning with permanent coverage.
4.) Fund Family, Experiences, and Learning
Your IRA distributions can become a catalyst for education, shared purpose, and intergenerational connection — not just income.
Why it fits your values: Shifts wealth from maintenance to meaning.
Examples:
- Contribute to 529 plans for grandchildren or fund experiential learning opportunities.
- Host an annual family retreat around giving, purpose, and financial stewardship.
- Seed entrepreneurial ventures or first insurance policies for children to model responsibility.
Closing Thoughts
For affluent families, the RMD is rarely about cash flow — it’s about alignment. How you use these required withdrawals either reinforces or erodes your purpose. Done well, each distribution becomes a quiet act of intention, integrating generosity, protection, and stewardship into the story of your wealth.
¹ QCDs must go directly to qualified 501(c)(3) charities — not to donor-advised funds or private foundations. More complex strategies exist such as a single purpose charity entity, but that is a topic for another post. The maximum amount for a QCD per year currently stands at $108,000 and will likely change every year.
