Charity Parity Act Allows 401(k) Tax-Free Donations for Retirees

A new bipartisan bill, the Charity Parity Act, was introduced in Congress allowing retirees to make tax-free charitable donations from their 401(k) accounts. Currently, qualified charitable distributions (QCDs) are only available to individuals aged 70½ or older from IRAs. The proposed legislation aims to eliminate the requirement to roll over funds from 401(k)s to IRAs for charitable contributions. If passed, individuals could transfer up to $111,000 per year from their retirement accounts directly to charities. This change could provide tax benefits and alleviate financial strain related to income adjustments for Medicare premiums.