New Bill Allows Direct IRA Rollovers to Donor Advised Funds, Easing Charitable Giving for Retirees

The aptly named IRA Charitable Rollover Facilitation and Enhancement Act of 2025 is looking to simplify how people use their retirement savings for charity. Right now, if you’re over 70.5, you can make a Qualified Charitable Distribution (QCD)—a direct, tax-free transfer from your Individual Retirement Account (IRA) to a charity. The catch? The current tax code (specifically Section 408(d)(8)(B)(i)) says you can’t roll that money over into certain places, including a Donor Advised Fund (DAF). This bill simply strikes that restriction, making DAFs an eligible destination for your charitable IRA rollover money.

The Fine Print on Charitable Flexibility

This change is a big deal for anyone who uses a DAF—a popular philanthropic tool that lets you contribute money, get the immediate tax deduction, and then decide which charities receive the grants later on. Before this bill, if you wanted to use your IRA’s QCD to fund your DAF, you couldn't; you had to send the money directly to a public charity. This bill changes that by allowing your IRA funds to flow directly into a DAF without being taxed as income, provided the distribution happens after the law is enacted.

What This Means for Your Retirement and Giving Strategy

Think of this as adding a new tool to your charitable giving toolkit, especially if you’re in your late 70s or older and have to take Required Minimum Distributions (RMDs) from your IRA. Currently, you can use a QCD to satisfy up to $105,000 of your RMD without paying income tax on that amount. Now, with this change, you could direct that tax-free distribution straight into your DAF. For a retiree who wants to fulfill their RMD obligation while also setting up a long-term giving strategy—say, funding a DAF with $20,000 to distribute over the next few years—this streamlines the whole process and keeps more money working for charity, rather than going to taxes.

Who Benefits from the Change

The primary beneficiaries are IRA holders aged 70.5 and up who are active philanthropists. It gives them more flexibility and control over the timing of their giving. It also benefits the charitable sector broadly, as it removes a hurdle that might have discouraged some individuals from using their IRA assets for charitable purposes. Since DAFs are often used to pool resources for future giving, this could potentially increase the total flow of funds into charitable causes over time. Since this only removes a restriction on a voluntary action, there are no groups negatively impacted—it simply provides more options for those who want to give.