January 1, 2013

Charitable Contributions from Your IRA

Would you like to give to charity out of your IRA without paying distribution tax? If you are older than 70½ years, you may make IRA distributions directly to an IRS-approved charity of your choice without having to pay income tax on the distribution. This can also serve as part of your minimum required distribution each year. Since this was not in effect until 1/2/13, you may do this until February 1, 2013 for the 2012 tax year.

While this kind of contribution (called a qualified charitable distribution, or QCD) can’t be claimed as an itemized tax deduction, it still equates to a 100 percent deduction, because you will not be taxed on the distribution, nor do you have to worry about the restrictions that apply to itemized deductions for charitable contributions.

A QCD must:

  • Be distributed directly by the IRA trustee to an eligible nonprofit organization.
  • Meet regular tax law requirements for a 100% deductible donation; that is, you must not receive any benefits, such as donor gifts or event tickets.
  • Be a distribution that would be taxable otherwise.

For more information about making charitable contributions from your IRA, call our offices today. We’re always available to advise our clients.