Bill would extend IRA charitable rollover rules to 401(k) and similar plans

What does this do?

This bill would allow people age 70½ or older to make tax-free donations directly from workplace retirement accounts — such as 401(k)s, 403(b)s, 457(b)s, SEPs, and SIMPLE plans — to eligible charities. That option already exists for IRAs, and this bill would extend it to those other account types. The combined limit for tax-free charitable donations across all account types would be $105,000 per year.

Who does it affect?

People most directly affected are workers and retirees age 70½ or older who still hold money in a workplace retirement plan rather than an IRA, which is common among those who worked for governments, schools, nonprofits, or large employers. Charities that receive these donations could also be affected. The bill does not apply to private foundations or donor-advised funds.

Why does it matter?

Without this bill, someone who wants to donate retirement plan money to charity must first withdraw it, pay income taxes on that amount, and then donate what remains. This bill removes the tax step when money goes directly from the retirement account to the charity.

Where does it stand?