Question:
Hi, Ed,
I am hoping I get to attend one or more of your events IN PERSON this year!
If you have time for a refresher . . . .
Jon’s 2021 RMD is $200k. He takes $100k as a distribution to himself in February and later, he decides to satisfy the remaining $100k as a QCD in November.
Does this work as far as the timing of the QCD?
Question:
Is there any problem with someone who is self-employed and has an active SEP making a deductible SEP contribution and an IRA QCD after age 70 1/2? In this case, the QCD would come from the IRA while the SEP continues to be funded. Does any offset apply?
Bill
Answer:
Hi Bill,
This is an interesting question!
Question:
My dad was 86 when he died and I inherited half of his IRA, which I elected to stretch. Am I correct in thinking that since I am not yet 70 ½, I am not allowed to direct qualified charitable distributions (QCDs) from this IRA? Please advise.
Thanks, Ron.
Answer:
Hi Ron,
You are correct. Beneficiaries can do QCDs, but to be eligible the beneficiary must be age 70 ½. If you have not yet reached that age, you may not do a QCD.
If you are charitably inclined and have an IRA, you might want to consider doing a Qualified Charitable Distribution (QCD) for 2019. The deadline for a 2019 QCD is fast approaching. It is December 31, 2019 and many custodians have even earlier cutoffs. Don’t miss out on this valuable tax break. Here are ten QCD rules you need to know.
1. Must be Age 70 ½
IRA owners who are age 70½ and over are eligible to do a QCD. This is more complicated than it might sound. A QCD is only allowed if the distribution is made on or after the date you actually attain age 70 ½. It is not sufficient that you will turn 70 ½ later in the year.
2. Beneficiaries Can Do QCDs
QCDs are not limited to IRA owners. An IRA beneficiary may also do a QCD. All the same rules apply, including the requirement that the beneficiary must be age 70 ½ or older at the time the QCD is done.
Question:
Hi Ed,
My question:
Is there any way to do a charitable distribution from my IRA before I reach RMD age? I am recently retired and 65 years old.
Thanks!
Marty
Answer:
Marty - The number-one requirement to be able to do a Qualified Charitable Distribution (QCD) is that the IRA account owner must be 70 ½ years old. We are not talking about the year in which you turn 70 ½, we are talking about actually being 70 ½. In fact, even on inherited IRAs, where the deceased account owner may have already reached 70 ½, it does not change the fact that the current account owner of the inherited IRA must also be 70 ½ before they can do a QCD.
Question:
Hello,
I’ve been a follower of Ed’s expertise for over 10 years. The information has always been helpful and clearly explained.
At this time, I’m looking to help a client minimize her taxes. She recently inherited an IRA from her father. She has taken the “Stretch IRA” option and is now receiving her required distributions.
Can she utilize a Qualified Charitable Distribution to her church (verified 501c3) to reduce her tax liability and still maintain the stretch IRA?
Answer:
Yes. Qualified Charitable Distributions (QCDs) are available to beneficiaries.
This week's Slott Report Mailbag answers readers' questions about commingling assets and QCDs.
This week's Slott Report Mailbag answers readers' questions about QCDs and RMDs.
The Tax Cuts and Jobs Act made sweeping changes to the tax laws. Brackets have been changed, deductions have been eliminated, and retirement plans have been affected. You may be wondering what the new law means for your IRA. Here are 5 things you need to know.
This week's Slott Report Mailbag answers readers' questions about purchasing a home as a senior (as a first-time home buyer) using IRA funds and QCDs under the Tax Cuts and Jobs Act.
