Fiscal Cliff RMD Charitable Donations

Submitted by Bob Lloyd on Fri, 2013-01-11 18:27

Some of what has been written on this subject seems to indicate the following is permitted. Traditional IRA owner is older than 70 1/2. RMD is taken in December, 2012. In January the IRA owner writes checks to qualified charities from his/her “regular” checking account, i.e. the donations do not go directly from the IRA account holder to the charity. The amount of these donations can be stated in 2012 income tax as non-taxible IRA withdrawals but still count toward the 2012 RMD. Has anyone heard or read anything that validates this interpretation of the law? Thanks.



Submitted by Alan - IRA critic on Fri, 2013-01-11 18:44

  • Your interpretation is correct. This “indirect rollover” treatment of a December distribution is a new feature to allow those that got tired of waiting for Congress to act with respect to the QCD and took their RMD is December to turn that distribution into a QCD no later than Jan 31st. I suggest waiting until the 1040 booklet is out to see if there is any special reporting instructions for the 2012 return other than to show “QCD” on line 15b as in prior years. The law is clear on this, so no special interpretation is needed.
  •  Here is a copy of the actual portion of Sec 208 of ATRA on these rollovers:

(B) any portion of a distribution from an 

 

 individual retirement account to the taxpayer   after November 30, 2012, and before January 1,    2013, may be treated as a qualified charitable    distribution to the extent that—   (i) such portion is transferred in cash  after the distribution to an organization de   scribed in section 408(d)(8)(B)(i) before   February 1, 2013, and   (ii) such portion is part of a distribu   tion that would meet the requirements of   section 408(d)(8) but for the fact that the    distribution was not transferred directly to   an organization described in section   408(d)(8)(B)(i).     

Submitted by Al Fry on Fri, 2013-01-11 22:14

Alan, if a person has taxes deducted from the distribution, I guess the gross amount could be contributed this month, correct? Al

Submitted by Alan - IRA critic on Fri, 2013-01-11 22:17

Yes, correct.

Submitted by Alan - IRA critic on Fri, 2013-01-11 23:14

Thanks, Al. While this release only addresses distributions made in December and January, 2013, it seems to overlook that some QCDs were also made retroactive to 1/1/2012, and those have to be reported also. The title of this release seems to cover all 2012 QCD reporting, but it makes no mention of the reporting of those made prior to 12/1/12. Maybe they don’t realize that many people were advised to proceed without waiting for Congress, as it had no downside even if the provision lapsed. Some custodians however would not make the check out to the charity. The two prior extensions also made the provision retroactive for the entire calendar year. Will see what the 1040 booklet indicates.

Submitted by Bob Lloyd on Sat, 2013-01-12 02:55

Thanks, Alan. Terrific, useful information.

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