As you may know, IRA owners must either withdraw the entire balance or start receiving periodic distributions from their traditional IRAs by April 1 of the year following the year in which they reach age 70-1/2. This is referred to as the Required Minimum Distribution ("RMD"). The distribution that is required each year is computed by dividing the IRA account balance as of the close of business on December 31 of the preceding year by the applicable life expectancy. An IRA owner who does not make the required withdrawals may be subject to a 50-percent excise tax on the amount not withdrawn.
Many who receive taxable distributions, also contribute to charitable organizations. If you are at least 70½ by the end of the year, you can exclude from gross income qualified charitable distributions up to $100,000 from a traditional or Roth IRA. Married individuals filing a joint return are allowed to exclude a maximum of $200,000 for these distributions ($100,000 per individual IRA owner). This exclusion counts toward satisfying your minimum required distributions from a traditional IRA, but is also available for taxable Roth IRA distributions.
Although a charitable contribution may be motivated by humanitarian reasons rather than by tax considerations, it is, nevertheless, wise to take tax considerations into account when making a contribution. Since this distribution must be made by the IRA trustee directly to a qualified charitable organization, you should review your charitable tax giving as soon as possible.