Is There an Age Requirement to Go Through with a Qualified Charitable Distribution?

Thursday, February 11, 2016

By Beverly DeVeny and Jeffrey Levine
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The qualified charitable distribution (QCD) questions keep rolling in – and we aren’t surprised. After all, the QCD provision is one of the biggest breaks in the tax code and it’s of tremendous value to the charitably inclined. In this week’s Slott Report Mailbag, we also walk a reader through the general IRA beneficiary provisions in a community property state. As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Find one in your area at this link.

1.

I have a question regarding QCDs in 2016. A report says you must be age 70 ½ to take a qualified charitable distribution. If an individual turns ago 70 (birth date 5/29/46) and reaches 70 ½ on 11/29/16, is the earliest QCD distribution date January 1, 2016 (the year the individual turns 70 ½) or 11/29 (the date they reach age 70 ½?)

Thank you for clarifying the tax ruling.

Lynette

Answer: 
The individual must be age 70 ½ at the time of the QCD transaction. In your example, the individual should wait until November 30, 2016 before doing the QCD transaction. Beneficiaries can do a QCD too, but they must also be age 70 ½ at the time of the distribution.

2.

I have a question about an IRA that was left designating a son as the sole primary beneficiary in the community property state of Texas. The father left an IRA to the son, but also has a trust set up to pay for the home and bills for his spouse. He named his son as the sole primary beneficiary, but the spouse has claimed half of the IRA account. Does the son have a “realistic” option to contest the spousal claim in Texas?

Answer:
This is more of a legal question than an IRA question. Generally in a community property state, a spousal waiver must be signed before a beneficiary form naming a non-spouse beneficiary is accepted by the IRA custodian. The beneficiary should consult with an attorney to explore his options.

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