QCD on verge of being made permanent
Some kind of extenders package will have to be passed. The pending version emerging from Congress includes making permanent the QCD, Sales Tax Deduction and some other provisions. Here is an article from Michael Kitces:
Permalink Submitted by barbara rosen on Wed, 2015-12-16 20:23
Thanks for the update, Alan. I’ve been awaiting word on whether the QCD is being extended to 2015. I want to take my QCD before I take my RMD distributions. Is it prudent to wait until the provisions are actually finalized? I would not make this contribution otherwise because I don’t itemize. I’m only concerned about the timing (before 12/31/15).
Permalink Submitted by Alan - IRA critic on Wed, 2015-12-16 20:53
How large is your planned QCD compared to your RMD?
Permalink Submitted by barbara rosen on Wed, 2015-12-16 23:33
Planned QCD is about 1/3 of my RMD.
Permalink Submitted by Alan - IRA critic on Thu, 2015-12-17 02:38
The proposed extenders bill is to be voted on by the end of this week. The QCD verbiage makes the QCD permanent retroactive back to 1/1/2015. All prior QCD extensions have been retroactive. Therefore, even if the QCD is not made permanent at the last minute, it is almost certain that it will still be extended for 2015 back to 1/1. You should be safe enough requesting that your IRA custodian first process the QCD check and the remainder of your RMD. You should request this right away since the QCD will be retroactive. No reason to wait further and then have to worry that the firm fails to distribute anything by year end.
Permalink Submitted by barbara rosen on Thu, 2015-12-17 20:57
I did as you suggested and requested the QCD. It took 45 minutes to get through, but it’s done. Now…I have to take the remainder of my RMDs. I’m trying to estimate the tax I want them to withhold. It’s not as easy as just looking at last year’s taxes owed, since this year my income will be much, much less. Again, thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2015-12-17 21:48
An additional safe harbor against underpayment penalties is paying by estimates or withholding 90% of your current year tax liability. Of course, this requires determination of your current year taxes and you may not have enough info to determine that. One solution would be to determine a rough estimate of those taxes, and then pad them by 10 or 20% and withhold that amount from the remainder of your RMD.
Permalink Submitted by Alan - IRA critic on Sat, 2015-12-19 20:42
QCDs are now permanent. Known as the ” PATH ACT” as approved by the House and Senate, the President signed the bill yesterday.