The Advantages of a Tax-Free Transfer From an IRA to Charity

Question: I’m 70 ½ and need to start taking required minimum distributions from my retirement accounts. I know I can make a tax-free transfer from my IRA to charity and have that count as my RMD. But what’s the advantage of doing that versus withdrawing the money and making a charitable donation on my own? Assuming I itemize deductions, doesn’t it have the same effect?

Answer: If you itemize, the tax deduction looks the same—at first blush. But because the transfer, called a qualified charitable distribution, keeps your required minimum distribution out of your adjusted gross income, it can help you stay below the income cutoff for some other taxes and charges. (For people who don't itemize their deductions, making the tax-free transfer can help them benefit from their charitable gift.)