Individual retirement arrangements offer tax benefits to get you to put more money away for your retirement. Though donating money to charity is a worthy ambition, and technically you can get money out of your IRA at any time, taking money from your IRA to do so when you're in your 20s and 30s usually isn't the most financially savvy way to help a good cause.
Traditional IRA Withdrawals
Distributions from traditional IRAs usually result in taxable income. You can, however, get a portion out tax-free if you've made nondeductible contributions to your traditional IRA. When you're under 59 1/2, you can't take a qualified withdrawal from your traditional IRA: the rule is as simple as that. Even pinky promising that you're going to give it all to charity won't transform an early withdrawal into a qualified withdrawal.
Roth IRA Withdrawals
Roth IRA withdrawals work differently. You get to take out all your contributions without being taxed whenever you want -- after all, you didn't receive a tax deduction for putting the money in. But, to get the earnings out tax-free, you have to be taking a qualified withdrawal. This requires the Roth IRA to be at least five years old and you to be at least 59 1/2, permanently disabled, taking up to $10,000 for a first home or withdrawing from an inherited Roth IRA. Sorry, being charitable doesn't have any effect on being able to take a qualified withdrawal.
Early Withdrawal Penalty
Any time you take a non-qualified withdrawal from your IRA, you owe an extra 10 percent tax penalty -- on top of the ordinary income taxes -- on the taxable portion of the distribution. There are some exceptions to the penalty, but no matter how deserving the charity, the IRS doesn't recognize an exception for donations. So, unless you qualify for another exception, such as if you're taking withdrawals from an inherited IRA or you're permanently disabled, your donation distribution is going to get socked with an extra tax penalty.
Regardless of whether your IRA withdrawal is taxed or penalized, you can still claim a write-off for your donation. However, your total charitable deductions for the year can't exceed 50 percent of your adjusted gross income. For certain charities like nonprofit cemeteries or veterans organizations, donations can't exceed 30 percent of your AGI. If you're donating too much to deduct this year, you can carry over the remainder to the next year. But, if you haven't used up your deduction after five years, you lose it.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."