There are many ways you can donate money to charity. Although it is easier to make cash donations, you can donate to charity directly from your IRA. The Pension Act of 2006 enables you to distribute all or part of your IRA directly to the charity you choose. You can donate all or a portion of your IRA while you are alive or as part of your will. Many nonprofit organizations strongly rely on donations, including those from IRAs for financial stability.
Step 1
Discuss your decision to donate all or part of your IRA with your financial administrator or financial adviser. Work with this adviser by discussing your financial goals, how you would like to donate your money and any concerns you have.
Step 2
Review the charities you are interested in donating to and narrow down your list. Take your time to research the charities you are interested in donating to, as not all nonprofits that request donations have the 501©(3) status necessary for you to be able to donate to an organization from your IRA. Make sure the charity you choose is a public charity. Discuss any questions you have about the legitimacy of a charity you are interested in donating to with the IRS.
Step 3
Contact the brokerage firm that holds your IRA. Request from the firm a charitable donation form. Write down the name of the charity you designate your donation for, as well as the percentage of your IRA funds you would like to donate. If you want to donate to more than one charity, list each organization and break down the percentage of funds or individual amounts you would like to distribute to each charity.
Step 4
Make sure your broker arranges to transfer the amount you specify at the time you indicate. You can specify a written cashier's check or a wire transfer.
Step 5
Write a letter to the charity you have chosen to donate to in order to inform them of your gift as the funds will not pass through you, making you responsible for telling them that the money is coming.
Step 6
Request a confirmation letter from your selected charity that states that the organization is public and able to receive donations that are qualified from IRAs. Ask the charity to verify the amount it received from your IRA in the same letter.
Step 7
Store paperwork that describes the details of your donation for tax purposes.
Tips and Warnings
- Charitable donations from IRAs are still withdrawals under the law, so all applicable tax rules and laws still apply. You have to be at least 71 years of age to make IRA withdrawals without penalties.
