Charitable Giving

Money from an individual retirement account can be donated to charity. What’s more, if you’ve reached the age where you need to take required minimum distributions (RMDs) from your traditional IRAs, you can avoid paying taxes on them by donating that money to charity. 

Normally, a distribution from a traditional IRA incurs taxes since the account holder didn’t pay taxes on the money when they put it into the IRA. But account holders aged 70½ or older who make a contribution directly from a traditional IRA to a qualified charity can donate up to $100,000 without it being considered a taxable distribution. The deduction effectively lowers the donor’s adjusted gross income.

To avoid paying taxes on the donation, the donor must follow the IRS rules for qualified charitable distributions (QCDs)—aka, charitable IRA rollovers. Most churches, nonprofit charities, educational organizations, nonprofit hospitals, and medical research organizations are qualified 501(c)3 organizations. The charity will also not pay taxes on the donation.

If you have additional questions please consult your tax or financial advisor.