April 2016 – Q: Can I make a withdrawal from my IRA and use it for a charitable gift without paying tax?
A: If you are 70½, you can use your Minimum Required Distribution up to $100,000 for charitable giving. It’s the only way I know of taking money from your IRA account tax free. And now, there is permanent extension of this benefit.
However, there are two considerations: 1) The check to your church or ministry must come directly from the financial institution where you have your IRA; 2) The gift does not qualify as a charitable deduction, since you have never paid tax on it.
I recommend using your MRD to make a tax-free, one-time-a-year gift. It saves you from paying taxes on the money, and your church or ministry gets the benefit of receiving it in a lump sum, which is always helpful in their planning.
Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).
Financial Issues website
AFA Foundation: 800-326-4543, ext 345