CARES and QCD
Made a 40,000 QCD for a client on march 26th 2020. Is there anyway or are you allowed to put funds from a qualified charitable distribution back into IRA under the 2020 relief rules? Thank you
Made a 40,000 QCD for a client on march 26th 2020. Is there anyway or are you allowed to put funds from a qualified charitable distribution back into IRA under the 2020 relief rules? Thank you
Permalink Submitted by Alan - IRA critic on Sun, 2020-04-19 14:11
Yes, if you otherwise qualify for a rollover the 40,000 could be replaced using other client funds and the distribution reported as a rollover on Form 1040. A QCD would not be reported as such, and the donation would become a donation of taxable funds subject to itemizing. The end result would be the same as if client used their taxable funds to make the donation, but most seniors do not itemize. In this case some of that 40,000 might be needed to equalize the standard deduction and this portion would not generate any tax savings. In addition, replacing the IRA distribution adds to the pre tax IRA balance another 40000 yet to be taxed. Therefore, unless client’s itemized deductions from making the donation a donation of taxable funds exceed the standard deduction by 40000, client would be better off to retain the QCD.