Making a Tax-Free Donation from an IRA
Making tax-free gifts from an IRA is gaining popularity, thanks to changes under the new tax law. You can give up to $100,000 from your IRA, and have it count as your Required Minimum Distribution (RMD) to a Qualified Charitable Distribution (QCD). The distribution isn’t included in your adjusted gross income, so it is tax-free.
The deadline for making the transfer is the same as for your RMD: December 31st, unless this is your first RMD. First timers have until April 1st of the year after turning 70 ½ to take an initial RMD. QCD’s are only available to individuals who are 70 ½ or older.
To qualify as a tax-free transfer, the money must be transferred directly from the IRA account to the charity. Contact your IRA administrator for its procedure. It’s a good idea to start the process ahead of time since the money has to come out of your account, and the charity must cash the check before the end of the year.