Transferring IRA Funds to Charity

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Who Can Transfer IRA Funds to Charity?

Congress has limited this costly tax break to those over age 70½.

Is the ability to transfer money from an IRA to charity available only to those over 70½? If so, why?

SEE ALSO: The IRS Cracks Down on IRA Mistakes

Yes, you have to be at least age 70½ in order to make a tax-free transfer from an IRA to a charity. Tax-free transfers are limited to those over age 70½ mainly to contain the drain on the federal budget. The idea of tax-free transfers for anyone age 59½ or older first gained traction when President George W. Bush included it in his budget proposal to Congress in 2002. The proposal became law in 2006, but it limited tax-free transfers to those over 70½ and capped the annual transfer at $100,000. That significantly lowered the cost.

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The IRA-to-charity strategy is particularly helpful for people who have accumulated a lot of money in their IRAs but don’t need the money to live on -- and would have to pay a big tax bill when they take their required withdrawals. The charitable transfer lets you give the money to charity and count it as a required minimum distribution but avoid taxes on the withdrawal. Not including RMD in adjusted gross income can also help you stay under the income cutoffs for the Medicare Part B and Part D high-income surcharge or taxable Social Security benefits.


If you’re younger than 70½, you can keep the money in your IRA and let it continue to grow tax-deferred but give other money to a charity and deduct the gift if you itemize your taxes. If you’re older than 70½, you can either make a tax-free transfer to charity or deduct the gift as a charitable contribution, but you can’t take both tax breaks for the same money.

Congress generally waits until the last minute to approve the law allowing IRA transfers to charity for the year, which leads to some last-minute scrambling as people try to beat the required minimum distribution deadline on December 31 (or after that, as was the case this year). But in January, Congress approved the transfer retroactively for 2012 as well as for 2013, so you have much more time to plan if you’d like to take advantage of the law this year.

For more information about required minimum distributions, see Answers to Questions About Required IRA Distributions.

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