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401(k)s

Making Charitable Donations From Your Retirement Accounts

You can't give your required minimum distribution from a 401(k) to charity without triggering a tax, but you can donate your 401(k) RMD tax-free if you roll the money over to an IRA.

Question: I know you can give your required minimum distribution from an IRA to charity tax-free. Can you also give your RMD from a 401(k) to charity?

Answer: No, the tax-free transfer of your RMD to charity only applies to IRAs. Still, there is an indirect way to give money from your 401(k) to charity tax-free. To do this, you will have to roll over money from your 401(k) to an IRA and then donate it to charity.

You will have to take your RMD from the 401(k) for this year before you can do the rollover. After that, you can roll over 401(k) dollars to the IRA for future charitable transfers. If you do this by the end of the year, you'll be able to start transferring some of the money to charity in 2018, which can satisfy all or a portion of the RMD from your IRA, says Jeffrey Levine, CEO and director of financial planning for the BluePrint Wealth Alliance in Garden City, N.Y.

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If you're 70½ or older, you can donate up to $100,000 from your individual retirement account directly to charity. The contribution counts towards your required minimum distribution and isn't included in your adjusted gross income. That could qualify you for tax breaks tied to your adjusted gross income and reduce or eliminate taxes on Social Security benefits.

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