Charitable IRA Distributions

The Pension Protection Act of 2006 allows you to make distributions directly from your IRA to one or more charities without the distributions being included in taxable income and subject to withholding. You must be 70½ or older at the time of the distribution.

Previously, withdrawals from IRAs for charitable gifts were taxable to the withdrawing donor. You are now able to make a tax-free gift by instructing the trustee of your IRA to transfer the withdrawal directly to the charity. Another benefit is that the funds transferred from your IRA to a charity count towards your mandatory withdrawal.

Making a charitable distribution from an IRA rather than from other assets is especially appropriate if you:

  • Do not itemize deductions;
  • Are already at the deduction limit for the year;
  • May lose some of your itemized deductions because of your income level, or
  • Are required to take distributions, but do not need them for living expenses.

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This document is for information purposes only and should not be construed as legal, tax or financial advice. Please consult your tax or legal advisor for more information.

Information provided courtesy of PG Calc.

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