Stretch your charitable giving dollars with charitable IRA distributions

If you’re age 70 ½ or older and hold an IRA, you may be able to save additional money on your tax bill through a charitable IRA distribution.

calculator-calculation-insurance-finance-53621Here’s how. The IRS requires that if you’re over the age of 70 ½, you must start taking at least annual withdrawals from any IRA, SIMPLE IRA, SEP IRA, or retirement account you may hold.

These withdrawals must meet dollar minimums, regardless of whether you actually need to take out that amount.

When tax time rolls around, these distributions must be counted in your gross income, raising your tax liability. If you typically give to charity and claim the charitable giving itemized deduction, though, you may be able to bypass that by instead rolling over your gift from your eligible IRA account directly to the charitable organization of your choice.

By doing this, you do not count the distribution as income on your tax return because you didn’t actually receive it. The contribution is basically deducted from your income, but you may still claim the standard deduction if you choose.

Just note that the receiving organization must qualify as a charitable organization under Sec. 170(b(1)(a) and not be a private foundation or donor advised fund.

What are the other rules for making a charitable IRA distribution?

First, it must be made from a traditional IRA or a Roth IRA. Next, the funds must be transferred directly from the IRA trustee to the charitable organization—with no intervening possession or ownership by the IRA owner. Finally, you must be age 70 ½ or older.

To learn more about the tax benefits of the charitable IRA distribution, click here. If you’re interested in making a charitable IRA distribution to United Way of Williamson County, email Angela Stafford at

Dec 26, 2017 | Miscellaneous

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