New Bill Lets Retirees Donate to Charity From 401(k)s

For the first time, retirees may be able to give directly to their favorite charities from their 401(k) accounts without jumping through tax hoops or losing money along the way.

The Charity Parity Act, introduced in May by bipartisan lawmakers in both the House and Senate, would allow anyone 70½ or older to make qualified charitable distributions straight from employer retirement plans like 401(k)s and 403(b)s. Right now, people who want to donate from these accounts face a frustrating choice: either roll the money into an IRA first or take a taxable distribution and watch automatic withholding shrink their gift.

"This streamlines a process that was needlessly complicated," says the American Retirement Association, which supports the bill alongside major charitable planning groups. The new pathway mirrors existing rules for IRA charitable giving, capping annual donations at $111,000 and allowing a one-time $55,000 gift to fund split-interest arrangements.

The timing couldn't be better. Charitable distributions from retirement accounts jumped 56% in 2024 and another 47% in 2025, according to FreeWill's latest report. Baby Boomers are hitting retirement age with substantial nest eggs, and over $14 trillion sits in employer-sponsored accounts that could support causes people care about.

Recent tax changes make this option even more attractive. The One Big Beautiful Bill Act placed new limits on itemized charitable deductions starting this year, but qualified charitable distributions avoid those restrictions entirely because they're treated as income exclusions rather than deductions.

The Ripple Effect

These donations also count toward required minimum distributions for retirees 73 and older, helping them support charities while keeping their taxable income lower. For nonprofits, the potential impact is enormous. Organizations could see billions in new donations from a funding source that was previously tangled in red tape.

While the bill faces a crowded legislative calendar, retirement policy enjoys rare bipartisan support in Washington. Lawmakers are already discussing a potential SECURE 3.0 package that could include this measure and other charitable giving reforms, like allowing donations to donor-advised funds or lowering the eligible age to 65.

For now, advocates are building support across party lines, positioning the bill for inclusion when the next retirement package moves forward. The message is simple: making it easier for people to give benefits everyone.