For Advisors: Five FAQs About IRA Gifts
"I have a lot of clients who are 70 ½ and older. I know the new tax laws are a big deal. Did the rules change for Qualified Charitable Distributions?"
The short answer is no: The One Big Beautiful Bill Act did not directly change the IRS's rules for Qualified Charitable Distributions. Through a QCD, a taxpayer who is over the age of 70 ½ can direct up to $108,000 (in 2025) from an IRA to an eligible charity, including some types of funds at the community foundation.
"I can tell there's more to the story. What else should I know to best guide my clients who are 70 ½ and older?"
QCDs are even more tax-savvy after the One Big Beautiful Bill Act because they bypass the new 0.5% adjusted gross income floor that will apply to itemized charitable deductions starting in 2026. Unlike other gifts, QCDs also avoid the 35% cap on deduction value for high-income taxpayers, preserving their full tax benefit. Because they reduce taxable income directly without requiring itemization, QCDs provide retirees with a simple, consistent way to maximize their charitable impact in a more restrictive tax environment.
"When should I call the community foundation if I have a client who is a good candidate for a QCD?"
Anytime! Several types of funds at the community foundation are eligible recipients of Qualified Charitable Distributions, including field-of-interest funds, designated funds, and board discretionary funds. Although your client's donor-advised fund is not a permissible QCD recipient under IRS rules, our team is happy to work with you and your client to establish another type of fund alongside an existing donor-advised fund and set in motion an overall strategy that meets both the client's financial and estate planning goals, as well as the client's goals for community impact.
"Remind me again why IRAs are such powerful legacy gifts to charity?"
Clearly, IRAs are tax-savvy savings vehicles during a client's lifetime because contributions to traditional IRAs may be tax-deductible. Plus, the assets inside the account grow tax-deferred, allowing returns to compound. Leaving an IRA to charity at death, such as to a client's fund at the community foundation, is also tax-savvy. The assets avoid income tax because the charity, unlike heirs, can withdraw the funds tax-free. The assets also escape estate tax because charitable bequests are fully deductible from the taxable estate.
"Does the whole QCD have to go directly to the charity?"
No. A special type of QCD allows your client to make a split-interest gift to either a charitable remainder trust (CRT) or charitable gift annuity (CGA). The per-taxpayer limit for this so-called "legacy IRA" is $54,000 in 2025. Note that the CGA option may be the most attractive option for your clients because of the significantly greater administrative burdens of setting up a CRT.
For more information about how we can help you serve your philanthropic clients, contact Laura Lederer. We're always available to answer your questions about philanthropy or to schedule a personal consultation with you and your clients – all at no cost.
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This content is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.