How IRA Owners Can Donate to Charity in 2024
In 2024, owners of Individual Retirement Accounts (IRAs) have a great way to give back to their communities. If you’re 70½ or older, you can donate up to $105,000 directly from your IRA to a charity, under a Qualified Charitable Distribution (QCD). This means you can simultaneously help those in need and get a tax break!
Here’s how it works:
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What is an IRA?
An IRA is a special tax-advantaged savings account that helps you save for retirement.
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Who is eligible?
You can use this opportunity if you’re at least 70½ years old.
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How much can you donate?
The rule for 2024 lets you donate up to $105,000.
- If you’re 73 or older, the money you donate can count towards the RMD you have to take from your IRA for the year.
- If you’re married, you and your spouse can each donate $105,000, making a combined total of $210,000.
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Why donate directly from your IRA?
There’s a significant benefit to donating directly from your IRA. The money you give to charity this way is a direct reduction to your gross income and doesn’t rely on you having to itemize in order to get the tax savings. And it also allows for a tax benefit for some state (such as in Michigan) that you wouldn’t otherwise.
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How do you do it?
You need to tell the company that manages your IRA that you want to make a donation directly to a charity, and they will handle the transfer.
- If you have a Roth IRA, it’s usually better to donate from your own money instead of using your Roth IRA, because Roth IRA withdrawals are already tax-free.
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Choose your charity wisely.
Make sure the charity you pick is qualified. This means it must be an official government-recognized charity.
Donating from your IRA is a great way to make a positive impact while benefiting from tax advantages. If you have questions or need help with the process, consider talking to a ShindelRock CPA or your financial advisor to guide you through the process and ensure everything is done correctly.