U.S. Sen. Todd Young (R-IN) on Tuesday introduced bipartisan legislation that would make it easier for older Americans to direct retirement savings to charitable causes.
The IRA Charitable Rollover Facilitation and Enhancement Act, S. 3975, would amend the tax code to allow Americans age 70½ or older to make Qualified Charitable Distributions from individual retirement accounts (IRA) to donor-advised funds.
Under current law, retirees can make tax-free charitable distributions directly from an IRA to a qualifying 501(c)(3) charity but are barred from making those distributions through donor-advised funds, a popular charitable giving vehicle managed by a public charity that allows donors to support multiple organizations with a single gift, Sen. Young’s office explained. The bill would remove that barrier by expanding the types of accounts eligible to receive qualified charitable distributions.
“Charitable giving has long been a way for Americans to support their local communities and causes they believe in,” Young said. “Our bill will make a small fix to the tax code to enable more flexibility for older Americans to generously give to the people, places, and organizations they care about.”
Sen. Young introduced S. 3975 along with lead original cosponsor U.S. Sen. Michael Bennet (D-CO) and it is under consideration by the Senate Finance Committee.
Bennet highlighted the role donor-advised funds play in directing money to local communities.
“Community foundations are one of the most powerful tools we have. They know their neighbors, understand local needs, and come up with creative ways to reinvest charitable contributions back into the places donors call home,” Rep. Bennet said.
Companion legislation was introduced in the House of Representatives last year by U.S. Reps. Adrian Smith (R-NE) and Jimmy Panetta (D-CA).
The bill is backed by eight national philanthropic organizations, including the Council on Foundations, National Philanthropic Trust and Philanthropy Roundtable, as well as more than 50 Indiana community foundations.