This checklist may be a helpful guide to moving their money from a 401(k), 403(b), or other non-IRA account to prepare for future QCD contributions.

This visual is designed to show donors why waiting until the year they have an RMD to move their 401(k) results in an unnecessary tax bill.

A qualified charitable distribution (QCD) counts toward the donor’s required minimum distribution (RMD), and that’s a great way to avoid some of the income tax on the RMD. However, some donors miss the fact that RMDs apply to all qualified retirement plans. In addition, donors may not fully understand that withdrawals from any qualified plan are taxable income unless the withdrawal is a QCD or a tax-free rollover to a different qualified plan.

So, while it’s accurate to say “your QCD will reduce the tax on your RMD,” that’s true only for the IRA account from which the QCD is made. And that’s the trap that snared your hapless donor: there is an RMD on their 401(k) which they will have to take this year. But they cannot make a QCD from a 401(k) to offset that RMD. Even worse, their retirement plan custodian cannot make a tax-free rollover to an IRA until after this year’s RMD has been withdrawn from the 401(k). Alas, it’s too late for this year but, fortunately, it’s easy to avoid this trap next year … if they act now.

The One Big Beautiful Bill Act (OBBBA) reshapes many aspects of tax planning. How these changes will affect donor behavior remains to be seen. For fundraisers, understanding the key changes – when they start, when they end, and how they’ll affect your donors – is critical to informing fundraising strategies and messages.

Most of the provisions of the OBBBA with significant potential impact on charitable giving take effect beginning in 2026 and, importantly, many of the charitable provisions are permanent and do not sunset. These changes provide a new, but complex, basis for charitable gift planning.

Here is a breakdown of several key provisions and their potential implications for donors . . .

On July 4th, President Trump signed into law HR 1, the “One Big Beautiful Bill” (OBBB). While technically a tax bill, the OBBB implements significant elements of the President’s second-term agenda including making permanent most of his 2017 tax cuts, which were set to expire at the end of 2025. Although the financial and tax impact on donors will vary, there is little in the OBBB that directly affects charitable gift planning, and the bill does not include many legislative priorities championed by the charitable sector.

Here is a summary of a few key individual taxpayer provisions of the OBBB along with some observations about the impact they could have on your work with donors.

Breaking News:

Late Monday, June 16, 2025, the Senate Finance Committee released its proposed revisions to the One Big Beautiful Bill Act. Among the proposed changes are:

• Increase and make permanent the non-itemizer charitable deduction to $1,000 for individuals and $2,000 for joint filers.
• Add a 0.5% floor on the charitable deduction for individuals who itemize (designed to offset the cost of the non-itemizer charitable deduction).
• Permanently extend the increased 60% AGI cap on the charitable deduction for cash contributions.
• Remove the increased net investment income tax on private foundations.
• Reduce the excise tax on investment income of private colleges and universities to:
  • $500,000 - $750,000 per student – 1.4% (same as House)
  • $750,000 - $2 million per student – 4%
  • More than $2 million per student – 8%
    (Note that “student” includes US citizens only)

Bear in mind, the Senate still must vote on the proposed legislation, and then the Senate and House versions will need to be reconciled. The majority are still pushing to pass the final bill before the July 4th holiday. In other words: “Stay tuned!”

Just after sunrise on May 22, 2025, the House of Representatives passed HR 1, “The One Big Beautiful Bill Act” by a vote of 215 to 214. Now, the Senate is considering the 1,038-page bill and proposing changes which will go back to the House for further consideration. Under the regular order, this back-and-forth process will continue until both chambers reach agreement on a final bill which then goes to the President for signature. The Administration’s announced ambition is to sign the bill into law by Independence Day.

We’re still a long way from knowing exactly what might be signed into law. Nevertheless, here is a summary of some of the provisions – as passed by the House – that could affect charitable giving.

Just before the holiday season began in the fall of 2023, the Treasury Department published and sought comments on proposed regulations governing donor advised funds (DAFs). Although long anticipated, the proposed regulations caught many of us off guard. Was this the opening salvo, a continuing assault on DAFs, or the final barrage? Is there more here than meets the eye or less? And what’s coming next? 

For decades, donor advised funds existed in legal limbo. As funds of a public charity (the community foundation), they have operated under a web of legal concepts and regulations governing community trusts and nonprofit fund accounting. Finally, the Pension Protection Act of 2006 provided legislative direction and then, 17 years later in the fall of 2023, these proposed regulations were issued.

For the most part, the proposed regulations are focused on providing definitions, clarifying the roles and responsibilities of the parties, and clarifying the distinction between donor advised funds and private foundations. The regulatory approach, the big stick if you will, is to define certain donor advised fund distributions as taxable and apply an excise tax on them.

It’s that most wonderful time of year again – lots of good cheer, too much fruitcake, not enough eggnog – and gifts – so many gifts! We see lots of gifts this time of year, and many different types of gifts – those between persons, certainly, but also gifts by employers, exchanges within groups, and of course, donations to charity. And in certain cases, the gifts fall into more than just one of those categories. In our world of planned giving, we frequently work with gifts that benefit both individual persons and charitable organizations. All of that is good, of course, but some gifts involve potential costs for the person doing the giving. It may seem counter intuitive, but in some cases, there are potential costs of giving.

To make sense of this apparent contradiction, let’s take a step back. If we leave out the charitable piece for a moment, we can focus on just the gifts that are made between persons. Most people would agree that one can never have too much money, but there are consequences of having great wealth under our tax structure. Since the early twentieth century, the United States has had a tax on the transfer of significant amounts of wealth between individuals. When we talk about “transfer taxes,” we are typically speaking about the taxes on transfers of wealth between living persons – “gift tax” – or taxes on the transfers of wealth from a deceased person to living persons – “estate tax.”

No doubt, you have heard about looming changes threatening the long-established rules governing donor advised funds (DAFs). Some commentators are sounding the alarm. The Philanthropy Roundtable says the changes “would stifle charitable giving, harming those in need.” Others welcome the effort to free up charitable dollars they believe have been squirrelled away for far too long. We will leave the Wagnerian sturm und drang to others, but it is important to understand these proposals and what may be coming our way.

On June 9, 2021, Senator Angus King (I-ME) introduced Senate Bill 1981, the Accelerating Charitable Efforts Act (the “ACE Act”) with Senator Charles Grassley (R-IA) as a co-sponsor. The bill was referred to the Committee on Finance. As of this writing, there are no additional co-sponsors and no companion legislation in the House. Although legislative prognosticators give the ACE Act only a 1% chance of becoming law in its current form, parts of it could find their way into other legislation. In addition, the ACE Act is heating up long-simmering debates about donor advised funds and private foundations.

Although the ACE Act includes some significant changes to the private foundation rules, donor advised funds are the primary focus – some will say “target” – of the bill. Following is a summary of major provisions of the ACE Act that apply to donor advised funds.

As of the writing of this article, the inauguration of Joseph R. Biden, Jr. as the 46th President of the United States is just days away. Although past changes in the balance of political power have had little impact on overall charitable giving, we know that when donors experience uncertainty they tend to postpone and delay their giving decisions. This is a natural reaction: charitable giving is optional and, faced with uncertainty, the rational choice is to slow down or defer giving until the future becomes clearer.

Changes in tax law can create new and different gift opportunities. Gift planners will need to watch carefully and be prepared to react strategically to changing circumstances. What concerns might surface among donors? Could potential changes affect donors’ gift plans? How might we anticipate and address them? In this article we begin with a review of some concerns that are likely to be on donors’ minds with respect to charitable giving followed by a discussion of some of the essential processes by which Washington works.