H.R.2891 - IRA Charitable Rollover Facilitation and Enhancement Act of 2025 (119th Congress)
Summary
H.R.2891, the IRA Charitable Rollover Facilitation and Enhancement Act of 2025, proposes to amend the Internal Revenue Code of 1986 to allow charitable rollovers from individual retirement accounts (IRAs) to donor-advised funds. This bill aims to repeal the existing restriction that prevents individuals from directly rolling over funds from their IRAs into donor-advised funds, potentially increasing charitable giving. The bill was introduced in the House of Representatives on April 10, 2025, and referred to the Committee on Ways and Means.
Expected Effects
If enacted, this bill would allow individuals aged 70 1/2 or older to directly transfer funds from their IRA to a donor-advised fund, satisfying their required minimum distribution (RMD) and potentially reducing their taxable income. This could lead to an increase in contributions to donor-advised funds, which in turn could increase the amount of money available for charitable causes. The change could also simplify charitable giving for some individuals.
Potential Benefits
- Increased Charitable Giving: By allowing rollovers to donor-advised funds, the bill could incentivize more individuals to donate to charity.
- Tax Benefits for Donors: Donors can satisfy their RMD while potentially lowering their taxable income.
- Simplified Giving: The bill simplifies the process of donating to charity for individuals with IRAs.
- Greater Flexibility: Donors gain more flexibility in their charitable giving strategies.
- Potential for Larger Donations: The ability to directly rollover funds may encourage larger donations.
Potential Disadvantages
- Reduced Tax Revenue: The government may collect less tax revenue due to increased charitable deductions.
- Potential for Abuse: Donor-advised funds may be used for purposes other than genuine charitable giving.
- Complexity: The interaction of tax laws and charitable giving can be complex, potentially leading to confusion.
- Administrative Burden: Increased rollovers may create additional administrative burden for financial institutions and the IRS.
- Unintended Consequences: The change may have unintended consequences on the overall charitable landscape.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution, as it aims to promote charitable giving, which can benefit society. Specifically, the preamble of the Constitution states the goal to "promote the general Welfare". Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. While this bill involves tax policy related to charitable giving, it does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).