QCD and the Secure Act

Submitted by Brad King on Thu, 2019-12-19 16:21

Probably I have missed it, but is there language in this bill that will raise the age from 70.5 to 72 for the QCD to be allowed? I have promoted the QCD to non-profit groups as a way to raise funds and to clients who are normally donors to charities, etc.



Submitted by David Mertz on Thu, 2019-12-19 18:32

As the the bill is currently written, the QCD eligibility age remains at 70½.



Submitted by Brad King on Thu, 2019-12-19 21:19

thanks for the information



Submitted by Alan - IRA critic on Fri, 2019-12-20 00:00

You should probably keep careful tabs on developments relative to Secure Act changes. If the QCD age is increased to 72 at any point, I would contact those charities right away and update them regarding the change. I imagine that most charities are referring tax questions to more qualified parties.



Submitted by David Mertz on Fri, 2019-12-20 01:29

  • It appears that the text that was published on December 16 has been approved by the Senate and is what will be signed into law tomorrow.
  • I don’t recall ever hearing any suggestion of legislation being introduced that would change the QCD eligibility age from 70½, but that doesn’t mean that such legislation can’t be introduced in the future.


Submitted by Alan - IRA critic on Fri, 2019-12-20 02:07

The QLAC age minimum of 70.5 does not correlate exactly with the first RMD for IRA owners, since that is 1/1 of the year that 70.5 is attained, and it certainly does not correlate at all with beneficiary RMDs which can start many decades prior to 70.5. Therefore, if the QLAC minimum age remains as is, an IRA owner will be able to do a QLAC from Day 1 of their first RMD distribution year. However, they will also have a period ranging from 6 months to 18 months (depending on DOB) for which they can do a QCD prior to January of the first RMD distribution year and therefore without RMD implications. The same consequence of taking a non QCD distribution before the QCD will continue as before, it will just start a year or two later.



Submitted by David Mertz on Wed, 2019-12-25 13:19

I haven’t seen it mentioned elsewhere, but the SECURE act adds language that prevents an individual from distributing as QCDs any deductible contributions made to traditional IRAs for the year that one reaches age 70½ and for years thereafter.   This means that individuals who might make QCDs will need to track their basis in *deductible* contributions made for those years.  I’m guessing that the IRS will treat the basis in deductible contributions made for those years as coming out of the individual’s traditional IRAs only after all other pre-tax money in the individual’s traditional IRAs has been distributed, but I’m not sure until the IRS issues guidance.



Submitted by James Bourg on Mon, 2019-12-30 14:36

I turn 70 1/2 in 4th Quarter 2020.  With the SECURE Act passage, my RMD age is now 72.  Can I make QCDs to eligible charities after turning 70 1/2 even if I have taken small Traditional IRA distributions (less than what would have been an RMD prior to the SECURE Act) earlier in 2020 before turning 70 1/2?  My understanding of the rules prior to the SECURE Act passage is that I could take QCDs up to the RMD) after turning 70 1/2 as long as any eariler distributions in the year did not exceed my RMD.  Don’t want to blow the opportunity to make QCDs in 2020 by taking distributions in the wrong order in 2020 or 2021 before RMDs start in 2022.  Would appreciate any guidance.



Submitted by Alan - IRA critic on Mon, 2019-12-30 15:21

Yes, you can still do QCDs once you reach 70.5, even though your RMDs do not start until 2022. Any QCD you do in 2020 or 2021 will still be non taxable, but will not be related to any RMD. Therefore, the timing requirements for taking RMDs and QCDs in the same year that you mentioned are postponed until 2022. Until 2022 you can do QCDs anytime you wish and also take non QCD distributions for yourself in any order. Therefore, without timing complexity for 2020 and 2021, I guess there is a risk of overlooking the start of RMDs in 2022 that will require timing your QCDs correctly starting 1/1/2022. The main thing to remember is that in an RMD distribution year, the first distributions taken that year are automatically applied to your RMD until the RMD is completed. Therefore you will want to avoid completing any RMDs that do not leave enough of the RMD left to cover the QCD amount you wish to make.



Submitted by James Bourg on Tue, 2019-12-31 12:20

Thanks for the reply. I thought/hoped this was the answer for 2020 and 2021.  Nice side effect of the SECURE Act is a free pass on QCDs between ages 70 1/2 and 72.



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