QCD Processed ... But Charity Went Out of Business | Ed Slott and Company, LLC

QCD Processed ... But Charity Went Out of Business

QCD was processed in Dec. 2019, the charity has still not cashed the check. The IRA owner has learned that the charity is closed due to coronavirus, may never reopen and if so, will never cash the check. IRA owner is working on his taxes now and not sure what can be done.

Can he have the check reissued as a QCD to another charity? (But there was no documentation for this alternate charity that was submitted with his QCD request back in Dec. 2019.)

Would he be obligated to just pay the taxes on his distribution and have the check reissued in his name?

Any guidance would be appreciated. Thank you.

  • tThere was no excuse for the charity not to have cashed the check immediately or at least long before Covid became a factor. Did the IRA owner secure the required contemporaneous acknowledgement of receipt of the check in order to make this a valid donation in the first place? If not, this was not a legal QCD, and perhaps not a donation that could be itemized either since the requirements are the same with respect to the charity acknowledgement (no quid pro quo etc). What date was the check mailed to the charity?  Since this was done so late in the year, was the QCD meant to offset the 2019 RMD? To offset an RMD, the RMD cannot be completed before the QCD.  
  • There isn't much IRA owner can do without the cooperation of the IRA custodian. Recovery of the funds is more important than the related issues since it is more time sensitive.Has this been discussed with the custodian, and will they issue a stop payment?  Will they allow the owner to return the funds to the IRA, and if so will they issue a corrected 1099R? Hopefully, they have established procedures to deal with this situation. What are they showing as the current value of the IRA? If IRA owner has not filed, an extension should be filed ASAP for 2019 to buy 3 more months to resolve this.
  • For others reading this, your QCD checks should be sent before December and should be cashed immediately by the charity with the acknowledgement received by mid December. That provides time to make other arrangements before year end.
  • Again, resolution will be easier working with the IRA custodian, but re issuing the check to another charity isn't possible for 2019. Let us know what the custodian prescribes for this.

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