Charitable gift from inherited IRA
I know that beneficiaries of inherited IRAs are not required to take distributions in 2009. Can beneficiaries of inherited IRA take advantage of the provision for charitable giving (up to $100k) if they are not under 70.5? I believe they are eligible for the charitable giving if they are over 70.5, just like an IRA owner, but wasn’t sure if this year, they can also make charitable gifts w/out paying taxes if they are under 70.5
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 21:51
An IRA beneficiary can make a QCD in the same manner as an IRA owner, and both must have reached 70.5 to the day when the distribution is made.
Any RMD can be satisfied by a QCD large enough to cover it. However, for 2009 distribution years, there is no RMD. The QCD is still a tax free distribution in 2009, but RMDs are not affected unless they are due for a prior RMD distribution year.
If a taxpayer only wants their RMD to go to charity, they should not take a QCD for 2009. If they want the charity to receive the funds anyway, they can make the QCD and the reduced value of the IRA will reduce RMDs and therefore taxes due in future years when the QCD may no longer apply.
Permalink Submitted by Anonymous (not verified) on Fri, 2009-02-20 00:39
Thanks Alan. Is there an IRS source or page from the website that I can look to for this? I want the client to be able to see this info for himself. Thanks so much for your help.
Permalink Submitted by Anonymous (not verified) on Fri, 2009-02-20 03:13
Much of this is included in the attached Notice 2007-7 under Sec 1201 of the PPA. Questions 34-44 include many of the QCD issues:
http://benefitslink.com/IRS/notice2007-7.pdf