A Simple Guide to Making Tax-Free Donations from Your IRA

Joseph Kubic |

Are you looking for a tax-smart way to support your favorite charity? Donating directly from your Individual Retirement Account (IRA) could be the answer! Here's a step-by-step guide to help you navigate the process with ease:

1. Know the Basics:

An IRA is a retirement account that allows individuals to save for their golden years with tax advantages.

Once you reach a certain age (usually 72), the IRS requires you to take Required Minimum Distributions (RMDs) from your IRA, which are taxable.

However, you can make Qualified Charitable Distributions (QCDs) directly from your IRA to eligible charities without counting the distribution as taxable income (as long as you meet the age requirement of at least age 70½ when the distribution is made).

2. Ensure Eligibility:

Not all charities qualify for tax-free IRA donations. Ensure that the organization you wish to support is a 501(c)(3) nonprofit.

Religious organizations like churches, temples, mosques, and synagogues are generally eligible, even if they are not officially registered as 501(c)(3) nonprofits.

3. Understand the Limits:

You can donate up to $105,000 per person for 2024 from your IRA to eligible charities without incurring taxes.

These donations count towards your RMD for the year, potentially reducing your taxable income.

If you’d like your QCD to cover your RMD, it’s important to start planning as early as possible, as the first distributions made from IRAs in an RMD year always count toward RMDs.

4. Consult Your IRA Administrator or Financial Advisor:

Contact your IRA administrator or meet with a financial advisor to initiate the donation process. They will provide the necessary forms and guidance on how to make a QCD.

Ensure that the distribution is made directly to the charity to qualify for tax-free status. If the funds are distributed to you first and then donated to the charity, it will be treated as taxable income.

Also, make sure to submit a distribution request early enough to allow time for the IRA custodian to process it and the charity to receive the donation before the December 31 deadline of the year you wish the QCD to count.

5. Stay Organized:

Keep records of your charitable donations for tax purposes. Your IRA administrator should provide you with documentation confirming the QCD for your records.

Consult with a tax professional to ensure that you comply with all IRS regulations and maximize your tax benefits.

6. Reap the Rewards:

Enjoy the satisfaction of supporting causes you care about while minimizing your tax burden.

Remember that tax laws can change, so stay informed about any updates that may affect your charitable giving strategy.

By following these simple steps, you can make tax-free donations from your IRA and make a positive impact on the causes you care about most!


If you’re interested in more detailed information, go ahead and schedule a free, no obligation meeting with our office to discuss your options further.


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