How to Ensure Your IRA Donation to Charity Is Tax-Free

Donating IRA money directly to a charity can satisfy your required minimum distribution and lower taxes, but IRA administrators vary on how to deliver your gift.

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Question: I want to give my required minimum distribution from my IRA to several charities. What steps do I need to take so that I’m not taxed on the RMD? Is there a minimum amount I can transfer or a limit to the number of charities I can send the money to?


People older than 70½ can transfer up to $100,000 per year from their traditional IRAs to charity, which can count as their required minimum distribution but is not taxable if they follow the rules for a qualified charitable distribution (QCD). (This doesn’t apply to a Roth IRA, which has tax-free withdrawals and no required distributions.) The gift stays out of your adjusted gross income only if you make a direct transfer from your IRA to the charity. It doesn’t count as a tax-free transfer if you withdraw the money first and then make a donation to the charity. Ask your IRA administrator what steps you need to take, because the procedures can vary from firm to firm.

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Fidelity, for example, gives you several options. If you have check-writing privileges on your IRA, you can write a check directly from the IRA to the charity. Or use Fidelity’s QCD form to have money sent directly from your account. Fidelity recommends submitting the form no later than November 30 to allow enough time for processing.

If Fidelity sends the money, the check will be written out to the charity and include your name. Let the charity know to expect the donation, and provide your address so that it can send you an acknowledgement for your tax records. Another option is to have Fidelity make the check out to the charity and send it to your home address so that you can forward the donation to the charity yourself.

Vanguard requires that you either fill out a form or call to request the transfer for the donation to count as a QCD. (See Vanguard’s Required Minimum Distribution Service for more information.) Vanguard makes the check out to the charity and sends it to you to forward. Make the request with plenty of time to receive the check and get it in the hands of the charity.

Neither firm has a minimum amount you can transfer to each charity, and neither limits the number of charities you can support each year. You can’t, however, transfer more than $100,000 tax-free from your IRAs in any one year.

For more information about the benefits of making a qualified charitable distribution, see The Advantages of a Tax-Free Transfer From an IRA to Charity.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.