Order Code RS22766
December 4, 2007
Qualified Charitable Distributions from
Individual Retirement Accounts: A Fact Sheet
John J. Topoleski
Analyst in Income Security
Domestic Social Policy Division
Summary
A provision of the Pension Protection Act of 2006 allows tax-free distributions
from Individual Retirement Accounts (IRAs) for charitable purposes. This fact sheet
describes the provision, which expires on December 31, 2007, and lists the bills in the
110th Congress that would extend it. The bills are H.R. 1419, H.R. 3596, H.R. 3970,
H.R. 3996, H.R. 4086, S. 819, and S. 2264. This fact sheet will be updated as legislative
activity warrants.
Distributions from Individual Retirement Accounts (IRAs) must be included in gross
income in the year the distribution occurs, and income taxes must be paid on the taxable
portion of the distribution. Section 1201 of the Pension Protection Act of 2006 (P.L.
109-280) allows individuals to exclude from gross income distributions from Individual
Retirement Accounts (IRAs) if they are made to a qualified charity.1 This provision for
Qualified Charitable Distributions (QCDs) expires on December 31, 2007. Several
legislative proposals in the 110th Congress would extend the provision for one year or
two years, or would make the provision permanent.
The features of the QCD are
! Contributions must be from traditional or Roth IRAs. QCDs cannot be
made from employer-sponsored IRAs (SEP-IRAs and SIMPLE-IRAs),
or from defined contribution retirement plans (for example, 401(k) plans
or 403(b) plans).2
! Individuals must be older than 70½ when the QCD is made.
1 See CRS Report RL33703, Summary of the Pension Protection Act of 2006, by Patrick Purcell.
2 A SEP-IRA is a Simplified Employee Pension. These plans were authorized by the Revenue
Act of 1978 (P.L. 95-600). A SIMPLE-IRA is a Savings Incentive Match Plan for Employees.
These plans were authorized by the Small Business Job Protection Act of 1996 (P.L. 104-188).

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! Charities must be eligible to receive tax-deductible charitable
contributions.
! The maximum QCD is $100,000, although a spouse can also make a
$100,000 QCD if the couple files a joint income tax return.
! The $100,000 maximum QCD does not apply to the overall charitable
deduction limit. Thus, individuals may make charitable contributions in
excess of 50% of adjusted gross income.
! The distribution must be a trustee-to-trustee transfer; that is, a direct
transfer from the IRA to the charity.
! The distribution first comes from taxable funds, then from any
nondeductible IRA contributions. Previously, distributions would have
been allocated proportionately between deductible and nondeductible
contributions.
Legislation in the 110th Congress
The following bills have been introduced in the 110th Congress to extend this
provision. One bill, H.R. 3996, has passed the House.
H.R. 3596. Representative Nick Lampson introduced the Charitable Tax Relief Act
of 2007 on September 19, 2007. This bill would make the charitable distribution
provision permanent.
H.R. 3970. Representative Charles Rangel introduced the Tax Reduction and
Reform Act of 2007 on October 25, 2007. This bill would extend the charitable
distribution provision until December 31, 2008.
H.R. 3996. Representative Charles Rangel introduced the Temporary Tax Relief Act
of 2007 on October 30, 2007. This bill contains a provision that would extend the
charitable distribution provision until December 31, 2008. This bill is Representative
Rangel's broader tax reform proposal and passed the House 216 - 193 on November 9,
2007.
H.R. 4086. Representative Ron Klein introduced the Healthy Families and Dedicated
Teachers Tax Relief Act of 2007 on November 6, 2007. This bill would make the
charitable distribution provision permanent.
S. 819/H.R. 1419. Senator Byron Dorgan and Representative Earl Pomeroy
introduced identical bills on March 8, 2007. The Public Good IRA Rollover Act of 2007
would make the charitable distribution provision permanent. In addition, the bills would
remove the $100,000 tax-free distribution limit, allow contributions to a split-interest
entity, and allow these contributions to a split-interest entity to be made tax-free after the
age of 59½.
S. 2264. Senator Pat Roberts introduced a bill on October 30, 2007, that would
extend the charitable distribution provision until December 31, 2009.
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