IRAs

FAQs About Giving Your RMD to Charity

Retirees can give up to $100,000 to charity tax-free from an IRA and have it count as their required minimum distribution for the year. Here’s what you need to know.

I get a lot of questions from people over age 70½ about giving their required minimum distribution to charity. The following answers to frequently asked questions will help you make plans to donate your RMD before the year-end deadline.

Can I give my RMD to charity now, or do I have to wait until December like I have in the past?

You can give your RMD to charity anytime during the year. In the past, Congress generally waited until December to approve the law each year, leaving IRA holders scrambling to transfer the money to charity before the December 31 RMD deadline. But Congress passed a law last December that permanently extends the Qualified Charitable Distribution provision, so you can now transfer the money to charity anytime during the year.

How much can I transfer from my IRA to charity? Can I transfer more than my RMD?

Yes, if you are 70½ or older, you can transfer up to $100,000 to charity tax-free each year -- even if that’s more than your RMD. The money counts as your required minimum distribution but isn’t included in your adjusted gross income.

I’ll be 70½ in a few months. Can I give my RMD to charity now?

Even though you can take your RMD anytime during the year you turn age 70½ (or until April 1 of the year after you turn 70½), you have to wait until you actually turn age 70½ to make the tax-free transfer to charity. See Taking Your First Required Minimum Distribution for more information.

Can I give my 401(k) RMD to charity?

No. You can only make the tax-free transfer from an IRA, not from a 401(k).

Can I withdraw the money from my IRA and then write a check to charity, or do I need to transfer the money directly?

The tax-free transfer won’t count if you withdraw the money from the IRA first and then make a contribution to the charity. You can take a charitable deduction for your contribution in that case, but the IRA withdrawal will be included in your adjusted gross income.

You need to transfer the money directly from the IRA to the charity for it to count as the tax-free transfer. Ask your IRA administrator and the charity about making a direct transfer, or you can have the IRA administrator send a check from your account to the charity. If you have check-writing privileges for your IRA, you can write a check to the charity. See Donate Your RMD Tax-Free to Charity in 2016 for more information about the procedures. Give the charity a heads-up, so it knows the contribution came from you and can send you an acknowledgement.

So which is better: the tax-free transfer or the charitable deduction?

If you make a tax-free transfer from your IRA to charity, you can’t also deduct that money as a charitable contribution. But the tax-free transfer could give you extra benefits. You don’t need to itemize your deductions to get a tax benefit from the gift (and many people who no longer have a mortgage don’t itemize their deductions). Making the tax-free transfer also keeps the money out of your adjusted gross income. That could help you avoid the Medicare high-income surcharge, which boosts your Part B and Part D premiums if your AGI is more than $85,000 if single or $170,000 if married filing jointly. Keeping the money out of your AGI could also make less of your Social Security benefits taxable.

For more information about required minimum distributions, see our RMD Special Report. Also see 6 Steps to Cutting Your Taxes When You Start Taking RMDs.

Most Popular

12 Costs of Owning a Cat
how to save money

12 Costs of Owning a Cat

Housecats may be known for their aloofness and low-maintenance attitude, but they're not cheap. Here's what you can expect to spend if you plan on ado…
October 16, 2020
26 Things Home Buyers Will Hate About Your House
real estate

26 Things Home Buyers Will Hate About Your House

As a home seller, you don't want to let the small -- or big -- fixes around your house that have added up over the years sabotage your bottom line dur…
October 16, 2020
11 Home Features Today's Buyers Want Most
home

11 Home Features Today's Buyers Want Most

Thinking about selling your house? Here are several home features potential buyers are coveting right now.
October 16, 2020

Recommended

Tax Extension Deadline: File Your 2019 Return by October 15 to Avoid Penalties
tax deadline

Tax Extension Deadline: File Your 2019 Return by October 15 to Avoid Penalties

If you chose to extend your tax return's due date, the tax extension deadline is October 15!
October 15, 2020
Roth IRA Contribution Limits for 2020
Roth IRAs

Roth IRA Contribution Limits for 2020

The Roth IRA contribution limit remains the same for 2020 as it was for 2019. Retirement savers 50 and older can contribute an extra amount. Income li…
October 1, 2020
The 25 Best Low-Fee Mutual Funds to Buy in 2020
mutual funds

The 25 Best Low-Fee Mutual Funds to Buy in 2020

The key to building wealth long-term is buying high-quality (but low-fee) mutual funds run by seasoned stock pickers who have skin in the game. Here a…
September 29, 2020
Deadline for Returning RMDs to Retirement Accounts is Approaching Fast
Coronavirus and Your Money

Deadline for Returning RMDs to Retirement Accounts is Approaching Fast

Retirees who took a required minimum distribution earlier this year need to act quickly if they want to avoid taxes on the money they withdrew.
August 24, 2020