Can I donate my IRA to charity?[ Edited ]
I will begin required IRA withdrawals in two years. How do I establish a method for donating these required withdrawals to charities/churches directly so that they will not be included in my taxable income?
You'll have to cross your fingers and hope that Congress acts to extend the current rules regarding qualified charitable distributions (QCD). The American Taxpayer Relief Act of 2012 extended the provision for 2012 and 2013, but since it sounds like you're looking at your first required minimum distribution in 2015, you'll have to take a wait and see if it will still be an option at that time.
Here are the rules for those looking to make a QCD in 2013.
First, you need to have reached age 70 1/2 when the QCD is taken from your IRA. And that leads to the second requirement: You need to have an IRA (not a 401(k) or employer plan). The QCD cannot be more than $100,000, must be made to an organization that is eligible to receive tax-deductible contributions, and that organization must provide you with documentation of your contribution.
You'll need to contact your IRA custodian and direct them to make the distribution payable to the qualified charity of your choice. The IRA custodian must make the check payable directly to the charity for the withdrawal to qualify as a QCD. Unlike other distributions from an IRA that are made on a pro-rata basis (taxable vs. non-taxable), QCDs are made first with taxable funds.
The Tax Benefits
Even though the distribution is paid directly to the charity (yes, I said that again), it counts towards your required minimum distribution for the year and will not be included in your income. However, the QCD will not qualify for a deduction as a charitable contribution. It's possible that using the QCD and not having the income from the QCD show up on your tax return will have some indirect tax benefits. For example, it might allow you to remain under thresholds that would trigger taxation of Social Security benefits or allow you to take advantage of certain deductions.
For 2013, the QCD must take place by the end of the calendar year.
When the time comes, I'd encourage you to talk with your tax advisor to determine if a QCD makes sense for you and compare it to other alternatives to suport the charities you care about. For now, you''ll just have to see if it stays on the books or fades into history. Good luck!