To amend the Internal Revenue Code of 1986 to exclude from gross income charitable distributions from certain employer-sponsored retirement plans, and for other purposes.
- Sponsor
- Rep. Beyer, Donald S. [D-VA-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- May 13, 2026
Bottom line
The bill expands the ability for seniors to make tax-free charitable donations directly from a wider array of retirement accounts, potentially increasing charitable giving and offering tax benefits to donors.
What it actually does
This bill amends the Internal Revenue Code of 1986 to allow individuals aged 70 1/2 or older to make tax-free charitable donations directly from their employer-sponsored retirement plans, such as 401(k)s, 403(b)s, 457(b)s, SEPs, and SIMPLE IRAs. This expands an existing tax benefit, previously limited to Individual Retirement Accounts (IRAs), to a broader range of retirement savings vehicles, up to the same annual dollar limit as IRA Qualified Charitable Distributions (QCDs).
Proponents argue
Supporters argue this bill encourages charitable giving by making it easier and more tax-efficient for seniors to donate from their retirement savings, aligning employer-sponsored plans with the existing IRA QCD rules. They contend it simplifies tax planning for retirees who wish to support charities and may increase the overall pool of charitable contributions, especially as more wealth is held in these types of accounts.
Opponents contend
Opponents might argue that this provision primarily benefits wealthier individuals who have substantial retirement savings and are already inclined to make charitable donations, potentially leading to a significant loss in federal tax revenue without a proportional increase in new charitable giving. They could also contend it adds complexity to the tax code by expanding a niche exclusion.
The bill is short and relatively straightforward for those familiar with tax code structure, but understanding its full implications requires some knowledge of existing retirement and charitable giving rules.
Section 1(a) amending Section 402 of the Internal Revenue Code, and subsections (b), (c), (d) amending Sections 408, 403, and 457.
Exclusion from Gross Income of Charitable Distributions from Employer-Sponsored Retirement Plans
This provision allows individuals who are 70 1/2 years or older to directly transfer funds from their employer-sponsored retirement accounts, such as 401(k)s, 403(b)s, 457(b)s, SEPs, and SIMPLE IRAs, to eligible charities without counting the distribution as taxable income. This mirrors the existing "Qualified Charitable Distribution" rule for traditional IRAs, extending the tax benefit to a broader range of retirement savings vehicles. The maximum amount that can be excluded annually is capped at the same limit as IRA QCDs (currently $100,000, indexed for inflation), minus any amounts already excluded from IRA QCDs.
Supporters argue
Supporters argue that this expansion simplifies charitable giving for a wider range of retirees, encouraging philanthropy by removing a tax barrier. They contend it levels the playing field between different types of retirement accounts and could lead to more funds flowing to deserving charities, especially as the population ages and more wealth is held in employer-sponsored plans.
Critics contend
Critics might argue that this provision primarily benefits wealthier individuals who are already charitably inclined and have significant assets in employer-sponsored plans. They contend it represents a tax expenditure that disproportionately favors high-net-worth individuals, potentially at the expense of federal revenue that could be used for other public services.
Tradeoffs
The bill balances the goal of encouraging charitable giving and simplifying tax planning for seniors against the potential for reduced federal tax revenue and the perception of creating a tax benefit primarily for the wealthy.
The 'applicable amount' for the exclusion is defined by cross-reference to the dollar amount in effect under section 408(d)(8) for the taxable year, minus any amounts already excluded under that section.
Section 402(m)(4)(A) (as added by Section 1(a) of the bill)
Why it matters:This is standard legislative practice to ensure consistency with existing tax law and to allow for automatic adjustments (e.g., for inflation) without needing to amend this bill directly.
Case for: Supporters argue that linking to an existing, well-understood limit (currently $100,000 for IRA QCDs) provides clarity and consistency in tax policy, avoiding the creation of disparate rules for similar charitable giving mechanisms.
Case against: Critics might argue that relying on cross-references makes the bill less transparent for the average reader, requiring external research to understand a fundamental aspect of the provision.
Estimated impact: This linkage ensures the new exclusion operates under the same annual cap as IRA QCDs, limiting the total potential tax revenue loss per individual.
The term 'qualified employer plan' is defined by cross-reference to specific clauses within subsection (c)(8)(B) of section 402, which include plans like 401(a) plans and 403(a) annuity plans.
Section 402(m)(4)(B) (as added by Section 1(a) of the bill)
Why it matters:This is common legislative drafting to avoid redundancy and ensure that the definition aligns precisely with existing legal classifications of retirement plans.
Case for: Proponents argue that using established definitions ensures legal precision and avoids ambiguity regarding which plans qualify, leveraging existing statutory language.
Case against: Opponents might suggest that this technical drafting makes it difficult for non-experts to quickly grasp the full scope of the bill's applicability without consulting multiple sections of the tax code.
Estimated impact: This definition ensures that a broad, but specific, range of common employer-sponsored retirement plans are included, significantly expanding the scope beyond IRAs.
This subsection amends the existing IRA QCD rules by striking language that previously excluded SEPs (Simplified Employee Pensions) and SIMPLE (Savings Incentive Match Plan for Employees) IRAs from being able to make QCDs.
Section 1(b) amending Section 408(d)(8)(B)
Why it matters:This is a precise legislative technique to modify the scope of an existing provision, ensuring that the change is integrated seamlessly into the current statutory framework.
Case for: Supporters argue this ensures comprehensive coverage for various retirement accounts, allowing more individuals to benefit from the tax-free charitable distribution option regardless of their specific plan type.
Case against: Critics might argue that such an indirect amendment could be overlooked by those not meticulously comparing the bill text to current law, potentially obscuring the full extent of the bill's reach.
Estimated impact: This change expands the universe of eligible retirement accounts, potentially increasing the total volume of tax-free charitable distributions.