Charitable IRA Distribution
Two part question: 1) We know that one has to be at least 70 1/2 to make a direct transfer from their IRA to a qualified charity. However, under the Tax Relief Act of 2010 that allows the IRA owner to take a distribution in January 2011 and have it treated as a 2010 distribution, how would this apply to a person who turns 70 1/2 this month (January)?…can they take advantage of the January distribution and count it as a 2010 distribution even though they where not 70 1/2 in 2010?
2) I think I know the answer to this one but would like confirmation. For the IRA owner who qualifies to do the January distribution and does the full amount of $100,000…can they turn around and do another $100,000 for 2011 even though the IRS says an IRA owner can only do $100,000 per year? My logic is that they can since the first $100,000 is technically counted in the previous year. Agree? Thanks for your help!
Permalink Submitted by Alan Spross on Thu, 2011-01-06 01:18
1) Good question. I was thinking about this problem a few days ago, and do not think it was clarified in the legislation. Until we know for sure, I suspect that it could not be done for the 2010 year. And of course, 2010 is not an RMD year, although the QCD can certainly be done irrespective of RMD considerations.
2) Yes, there is no limitation as to when the 2011 QCD can be made. Unless there is a reporting requirement for the IRA custodian requiring January QCDs to be assigned to the appropriate year, they may be creating a situation where someone could make a single January QCD and determine later how much of it to assign to each year.
I will check to see if there is any guidance to custodians on this, but Congress left the IRS hardly any time. They take all year and then expect everyone else to rush their decision with some obvious risk involved since once the QCD is issued, it’s gone for good.