How to Donate an IRA to Charity
For many individuals donating to a charity that they support is very important. In addition to traditional type donations, it is possible to donate all or part of an IRA to charity. Use the following as a guide in knowing how to donate an IRA to a charity of your choice.
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Instructions
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Establish your desires to donate all or part of your IRA to charity with your plan administrator or financial adviser. Distribution of the funds in your IRA or Roth IRA should be clearly stated in writing. It would be best if the name of the charity is listed as a beneficiary and the percentage of the funds to be donated to that charity listed. If you have more than one charity you plan to donate to, then list each charity and the percentage of the funds that will be donated or distributed to each.
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Make your desires and final wishes known by placing instructions in your will. Upon your death, your wishes will be carried out to donate all or a portion of the funds of your IRA to the charity you have selected. It is a good idea to make a family member aware of your desires for the donation to the charity.
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Check out the charity that you plan to donate all or a portion of you IRA to. Make sure that the charity actually qualifies as a charity. Not all organizations that ask for donations qualify as charitable organization under the guidelines of the federal government, so check them out.
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Donate to the qualified charity from your IRA in amounts of up to $100 thousand tax-free. This can be done at any time and not just upon death. This donation, however, does not qualify as a tax deduction, but rather the money taken from the IRA account and given to the charity is given or donated free from taxation.
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Tips & Warnings
Note that this tax-free donation to a charity only applies to the IRA accounts and not 401(k) accounts.
The ability to donate all or portion of your IRA to a charity is made possible by the Pension Protection Act of 2006, which is scheduled to expire in December of 2007. However, it is expected to be extended, so check with your plan administrator or financial adviser to make sure that the tax-free donation will be honored when you plan to make your donation.
