How to Donate Your 401(k) or IRA to Charity

Donating all or part of your retirement funds to charity can have significant tax benefits, but the rules and process depends on several factors, including whether you are donating now, or if you are leaving a charitable contribution as part of your estate planning after death.

Donating Your IRA to Charity (before death)

Eligible IRA account owners who are age 70-½ or older can donate up to $108,000 (in 2025) to charity directly from their IRA. These transfers are known as qualified charitable distributions (QCDs).

Donating Your 401(k) to Charity (before death)

If you're interested in making charitable donations from your 401(k) account, consider the following steps:

1. Roll over your 401(k) to a traditional IRA: This process is typically tax-free and allows you to consolidate your retirement funds.
2. Make Qualified Charitable Distributions from the IRA: Once the funds are in a traditional IRA, you can make QCDs directly to eligible charities, provided you're aged 70½ or older (see above).

Donating Your Retirement Account to Charity (after death)

The rules are different if you're donating your IRA or 401(k) after death. If you name a charity as the beneficiary of your traditional IRA or 401(k) in your will or beneficiary designation form, the following applies:

Key Advantages:

• Charities pay no income tax on distributions from retirement accounts (like traditional IRAs or 401(k)s).
• Income taxes that would otherwise be owed by an individual beneficiary can be avoided.
• This makes retirement accounts one of the most tax-efficient assets to donate to charity after death.

Important Details:

• Your age at death doesn’t matter. Whether you die before or after your required minimum distribution start date, the tax advantage still applies to the charity.
• You should name the charity directly as a beneficiary on your IRA/401(k) plan—not just in your will. Why?
  • Retirement accounts do not pass through your will; they pass by beneficiary designation. Learn more about this important detail in the following guides:
    How to Designate a Beneficiary for your 401(k) Account
    Making Beneficiary Designations for Non-Probate Assets
  • If your will and your account paperwork conflict, the beneficiary designation wins.

Strategy Tip:

If you're planning to give to both individual beneficiaries and charity, it's smart to:

• Leave taxable retirement accounts (like a traditional IRA or 401(k)) to charities, and...
• Leave non-taxable assets (like Roth IRAs, and real estate, or investment accounts that get a stepped-up basis upon death) to individuals.

That way, the charity gets the full value, and your heirs avoid unnecessary income taxes.

What are the advantages of gifts in a retirement account?

First, a charity doesn’t have to pay income taxes on a retirement plan’s distribution, which means funds from an IRA or 401(k) will have a greater impact when received by the charity.

On the flip side, if your IRA is left to family or loved ones, it may be subject to accelerated distribution and significant taxation. A traditional IRA account is subject to federal income taxes, and potentially state income taxes. These add up quickly and can be as high as 37% for federal, not to mention state and local income taxes.

Does anything change based on what retirement account I have?

In some senses, yes. If you have a traditional IRA, a 401(k), or a 403(b), all of the above benefits apply.

But, if you have a Roth IRA, it’s not as tax-smart to leave your charitable gifts from that account. As long as your Roth IRA has been open for five years prior to your heirs making withdrawals, they’ll receive that money tax-free. Choosing charities as beneficiaries instead means your heirs lose that valuable tax break. In this case, you may be better off designating your charitable beneficiaries directly in your will.

As with any decisions of this nature, you’ll want to consider the pros and cons in the context of your specific estate. But generally speaking, strategically designating a charitable gift in your retirement account can have huge tax benefits for both the charity and your heirs, allowing you to maximize your impact on the people and causes you care about.