Leaderboard

Another financial-planning choice is an age 70½ (not 75 or 73) IRA holder’s opportunity to direct the IRA’s custodian to pay a qualified charitable distribution directly to a charitable organization and exclude up to $105,000 [2024] from a year’s gross income. I.R.C. (26 U.S.C.) § 408(d)(8). Because that tax rule is particular to IRAs (not employment-based retirement plans), a 69-year-old might leave in an IRA some balance for anticipated charitable donations. (Or an employment-based plan’s participant who has not reached her required beginning date might yearly rollover amounts into an IRA for the next year’s-worth of anticipated charitable donations.) For some people (especially those whose tax returns use a standard deduction rather than itemized deductions), qualified charitable distributions can be a tax-efficient way to make one’s charitable donations.

The 404(a)(3) limit is 25% of compensation. The top heavy minimum contribution in a DC plan is 3% of compensation. Since 3 is less than 25, I am not sure why the deduction limit would be an issue here. Can you be more clear about your question?