Recent tax law changes have complicated IRA charitable giving rules. Here are answers to frequently asked questions:
Did OBBBA change QCD rules? No. The One Big Beautiful Bill Act did not modify Qualified Charitable Distribution rules. Taxpayers over 70½ can still direct up to $108,000 (2025 limit) from IRAs to eligible charities, including community foundation funds.
Why are QCDs more valuable now? QCDs bypass the new 0.5% adjusted gross income floor applying to itemized charitable deductions starting in 2026. They also avoid the 35% cap on deduction value for high-income taxpayers, preserving full tax benefits while reducing taxable income directly without requiring itemization.
When should I contact the community foundation for QCD planning? Contact us anytime. Several fund types accept QCDs, including area of interest funds, designated funds and community funds. While donor advised funds cannot receive QCDs under IRS rules, we can establish complementary fund structures to meet both financial and charitable objectives.
Why are IRAs powerful legacy gifts? IRA charitable bequests to community foundation funds avoid income tax (charities withdraw funds tax-free) and estate tax (charitable bequests are fully deductible from taxable estates). This dual tax advantage maximizes impact for both the charity and the donor's estate.
Must the entire QCD go directly to charity? No. Special "split interest" QCDs allow gifts to charitable remainder trusts (CRTs) or charitable gift annuities (CGAs), with a 2025 per-taxpayer limit of $54,000 for these legacy IRA distributions.
Contact us to develop charitable giving plans that optimize QCD benefits for your clients.