Let’s face it–the rules for using IRAs to give charitably were complicated before the OBBBA got thrown into the mix. Let’s address five frequently asked questions we’ve been hearing from advisors as you counsel your charitable clients.
“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?”
This is a great question, and it’s super important. The short answer is no–the OBBBA did not directly change the IRS’s rules for Qualified Charitable Distributions, or “QCDs.” Through a QCD, a taxpayer who is over the age of 70 ½ can direct up to $108,000 (2025 limit) from an IRA to an eligible nonprofit, including some types of funds at the 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?”
We are glad you asked! QCDs are even more tax-savvy after the OBBBA 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 a simple, consistent way to maximize charitable impact in a more restrictive tax environment.
“When should I call the Foundation if I have a client who is a good candidate for a QCD?”
Anytime! Several types of funds at the Foundation are eligible recipients of QCDs, including Field of Interest Funds, Designated Funds, Scholarships, and Unrestricted 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 develop another strategy that meets both the client’s financial and estate planning goals as well as their goals for community impact.
“Remind me again why IRAs are such powerful legacy gifts to nonprofits?”
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 a nonprofit at death, such as to a client’s fund at the Foundation, is also tax-savvy. The assets avoid income tax because the nonprofit, 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 2025 per-taxpayer limit for this so-called “legacy IRA” is $54,000. 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.
Please reach out to our team. We are happy to set up a charitable giving plan that allows your client to make QCDs to help achieve their charitable goals.