Qualified Charitable Distributions from
Individual Retirement Accounts: A Fact Sheet
John J. Topoleski
Analyst in Income Security
September 24, 2010
Congressional Research Service
7-5700
www.crs.gov
RS22766
CRS Report for Congress
P
repared for Members and Committees of Congress
Qualified Charitable Distributions from Individual Retirement Accounts: A Fact Sheet
Summary
A provision of the Pension Protection Act of 2006 (P.L. 109-280) allows tax-free distributions
from Individual Retirement Accounts (IRAs) for charitable purposes. This fact sheet describes the
IRA Qualified Charitable Distribution (QCD) provision. The provision had expired on December
31, 2007; it was extended until December 31, 2009, by H.R. 1424/P.L. 110-343, signed by
President George W. Bush on October 3, 2008. In the 111th Congress, the following bills would
extend the provision beyond December 31, 2009: H.R. 2435, H.R. 1250, S. 3134, and S. 864.
This fact sheet will be updated as warranted.
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Qualified Charitable Distributions from Individual Retirement Accounts: A Fact Sheet
Contents
Qualified Charitable Distributions ............................................................................................... 1
Legislation in the 111th Congress ................................................................................................. 1
Received Floor Action........................................................................................................... 2
Introduced............................................................................................................................. 2
Contacts
Author Contact Information ........................................................................................................ 2
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Qualified Charitable Distributions from Individual Retirement Accounts: A Fact Sheet
Qualified Charitable Distributions
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 aged 70½ and older 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) had expired on December 31, 2007. P.L. 110-343 extended this
provision until December 31, 2009.
The features of the QCD are
• Contributions must be from traditional or Roth IRAs. QCDs cannot be made
from employer-sponsored IRAs (Simplified Employee Pensions (SEP-IRAs) and
Savings Incentive Match Plan for Employees (SIMPLE-IRAs), or from defined
contribution retirement plans (for example, 401(k) plans or 403(b) plans);
• Individuals must be older than 70½ when the QCD is made;
• 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; and
• 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.
The QCD allows taxpayers aged 70½ or older to exclude from their gross income IRA
distributions that are transferred directly to a charity. Absent the QCD, some taxpayers could
achieve the same result by including the IRA distribution in gross income, donating the
distribution to a charity, and taking a tax deduction for the donation. However, taxpayers who do
not itemize their tax deductions or whose charitable contributions exceed 50% of their gross
income would not benefit, as they do from the QCD.
Legislation in the 111th Congress
As of September 24, 2010, the following legislation has been introduced to extend the QCD
provision beyond December 31, 2009.
1 See CRS Report RL33703, Summary of the Pension Protection Act of 2006, by Patrick Purcell.
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Qualified Charitable Distributions from Individual Retirement Accounts: A Fact Sheet
Received Floor Action
H.R. 4213. Representative Charles Rangel introduced the Tax Extenders Act of 2009 on
December 7, 2009. Among other provisions, this bill would extend the QCD provision until
December 31, 2010. This bill passed the House on December 9, 2009, by a vote of 241-181. The
Joint Committee on Taxation estimated that this provision would reduce revenues by $175 million
in FY2010 and $187 million in FY2011.2 The bill, with amendments unrelated to the QCD
provision, passed the Senate on March 10, 2010. The House passed an amended version of the
Senate bill on May 28, 2010. The Senate dropped the QCD (among other provisions) from the
version passed by the Senate on July 21, 2010.3 The House passed this Senate bill on July 22,
2010, and President Barak Obama signed the bill into law on July 22, 2010 (as P.L. 111-205).
Introduced
H.R. 2435. Representative Suzanne Kosmas introduced the IRA Charitable Giving Act on May
14, 2009. This bill would extend the QCD provision until December 31, 2010.
H.R. 1250 / S. 864. Representative Earl Pomeroy introduced the Public Good IRA Rollover Act
of 2009 on March 2, 2009, and Senator Byron Dorgan introduced an identical bill on April 22,
2009. Among other provisions, the Public Good IRA Rollover Act of 2009 would make the
charitable distribution provision permanent.
S. 3134. Senator Charles Schumer introduced the Currency Exchange Rate Oversight Reform Act
of 2010 on March 17, 2010. Among other provisions, this bill would make the charitable
distribution provision permanent.
S. 3793. Senator Max Baucus introduced the Job Creation and Tax Cuts Act of 2010 on
September 16, 2010. Among other provisions, this bill would extend the QCD provision until
December 31, 2010.
Author Contact Information
John J. Topoleski
Analyst in Income Security
jtopoleski@crs.loc.gov, 7-2290
2 For further information see JCX-59-09, Estimated Revenue Effects Of H.R. 4213, The “Tax Extenders Act Of 2009,”
available at http://www.jct.gov/publications.html?func=select&id=17.
3 All sections of the bill related to the extension of expired tax provisions were dropped from the bill that passed the
Senate on July 21, 2010. H.R. 4213 was used to pass an extension of unemployment compensation.
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