Wider Access to Qualified Charitable Distributions Would Benefit Everyone

Christopher Wells

Sometimes, the experiences of a subset of retirement savers can illustrate how broader legislative reforms would help all retirement savers. Such is the case with the experiences of religiously motivated charitable donors and the potential impact of the Charity Parity Act.

On May 13, 2026, bipartisan groups of legislators introduced the Charity Parity Act in both the House and Senate. The bill would allow Americans older than 70.5 years to make tax-free donations to qualified institutions directly from employer-sponsored retirement plans. Known as qualified charitable distributions, such gifts go straight from the account to the charity, stay out of taxable income, and count toward required minimum distributions. But today, only individual retirement account owners can make QCDs. By correcting a longstanding inequity that makes such charitable giving easier for people who save money in IRAs as opposed to employer-sponsored accounts, the Charity Parity Act would make giving more accessible for millions of retirement plan participants. It would also help to promote impactful charitable giving across the country.

To better understand the positive impact that the Charity Parity Act would have, the circumstances of the nation’s faith-based givers are instructive. According to Indiana University’s Lake Institute on Faith & Giving, more than 95% of people of faith reported making charitable donations in 2023. In the Judeo-Christian faith traditions, sacred scripture urges believers to “give generously” and “without a grudging heart” (Deuteronomy 15:10). The foundational texts of almost all of the world’s religions say something similar. When accounting for giving to houses of worship and faith-based nonprofit organizations, the Philanthropy Roundtable estimates that religiously based giving accounts for 73% of all charitable donations in the United States. Across faith traditions and income brackets, religious teachings inspire generosity.

But for religious Americans older than 70.5 years who wish to give from a retirement account, the existing paths forward differ significantly depending on whether their money is held in an employer-sponsored retirement account, like a 401(k) or 403(b), or in an IRA. This is because under current law, Americans can make QCDs only from IRAs. Participants in employer-sponsored retirement plans who wish to make such contributions must roll over their employer-sponsored retirement account dollars to an IRA before distributing the money to qualified institutions. To execute such a transfer, plan participants must complete rollover paperwork, coordinate across multiple institutions, and, in some cases, pay related account fees.

Thus, to advance religious service through charitable giving, faith-based Americans with balances in employer-sponsored retirement accounts must either pay the associated taxes to withdraw the donation money directly from an employer-sponsored account or execute an administratively burdensome IRA transfer. Fellow worshipers whose money happens to be in an IRA face no such challenge.

The religious example illustrates the broader logic of the Charity Parity Act. Regardless of the underlying motivations, Americans who are committed to charitable giving should  face the same set of circumstances whether their money is held in an employer-sponsored retirement account or an IRA. By harmonizing QCD rules, the Charity Parity Act would rightfully make charitable giving opportunities equally accessible to employer-sponsored retirement plan participants. More efficient giving from employer-sponsored retirement plan participants would, in turn, help to strengthen the capacity of institutions like churches, synagogues, day cares, and soup kitchens that serve American congregations and communities.

The next time congressional leaders consider legislative proposals to reform the retirement system, the Charity Parity Act should be near the top of the list. The perspectives of faith-based donors help to demonstrate why.

Christopher Wells is the Executive Director of the Church Alliance, which advocates on behalf of denominational employee benefits organizations.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.