Donating IRAs to Charity During Your Lifetime

RMD and charityDonating your RMDs to a charity can lower your tax liability it is not for the faint of heart as IRA administrators vary on how you can deliver this gift.

Gifting your required minimum distribution (RMD) from an IRA to one or more charities is certainly altruistic; it properly executed it saves you the tax associated with these distributions as well. If you're thinking of doing this, make sure that you understand the steps you need to take to avoid the tax on the RMD.

Folks older than 70½ can transfer up to $100,000 annually from their traditional IRAs to charity. This move can satisfy the RMD, but isn’t taxable, if they follow the rules for a qualified charitable distribution (QCD).

The gift is not a part of your adjusted gross income if you make a direct transfer from your IRA to the charity. That means it will not count as a tax-free transfer if you withdraw the money first and then make the charitable donation. You should speak with your IRA administrator about the required steps. These procedures are different with different firms.

Some will have several options. For instance, if you have check-writing privileges on your IRA, you may be able to simply write a check directly from the IRA to the charity. You may also have the option to use the IRA’s QCD form and direct the money from your account.

You should be timely in submitting the form or writing the check, so it is processed in the current year. November 30 is a good cut-off to give the IRA administrator sufficient time for processing.

If your IRA sends the money, the check will be written out to the charity and include your name. You should give the charity a head’s up that it should expect your donation. You’ll also want to give them your address, so the organization can send you a receipt for your tax records. Another way to go about this is to have the IRA administrator cut the check payable to the charity and mail it to your home address. You can then forward the donation to the charity yourself.

For example, Vanguard requires you to either complete a form or call them to request the transfer, so the donation will be counted as a QCD. Vanguard will make out the check to the charity and send it to you to forward.  You should be certain to make your request with ample time to receive the check and deliver it to the charity.

Vanguard and other IRA administrators typically have a minimum amount that you can transfer to each charity. There are generally no limits on the number of charities you can support each year.  However, note that you can’t transfer more than $100,000 tax-free from your IRAs in any one year.

Reference: Kiplinger (July 28, 2017) “How to Ensure Your IRA Donation to Charity Is Tax-Free”


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