IRA Rules

Archive for September, 2007

Question: Tax questions on IRA Withdrawal?

I have money in an IRA I would like to withdraw and give to my church for their building campaign for a one time gift. (Given the history of cancer and heart disease in my family, it’s unlikely I’ll make it to age 59 1/2 for a regular distribution.) If I read the IRS tax code right, I’ll have to claim it as income & then be hit for a 10% penalty, plus whatever tax is due on it for income, right?

So here’s the second question. If I do take the IRS money out and have to claim it as income, then can I claim it as a charitable contribution since I’m giving it to the church?

Thanks for any assistance!

Answer: If you take a withdrawal before age 59.5, you normally will pay a 10% penalty tax in addition to your income tax. This will apply even if you give your IRA to charity.

However, if you give your IRA distribution to charity, you can deduct that in full from your taxable income on Schedule A.

So, at worst you are paying 10% tax and giving your money to the charity of your choice.

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