QCD Question

Submitted by Kevin O'Hearn on Fri, 2019-02-15 03:35

Hello, I was under the impression that as long as a client is eligible for a QCD the funds need to be distributed out of the client’s IRA account by 12/31/2018 to be considered a 2018 QCD. I have seen a publication that states the qualified charity must receive the QCD by 12/31/2018 to count as a 2018 QCD. I’ve also seen a publication that the qualified charity must receive and process the QCD by 12/31/2018 for it to be considered a 2018 QCD. Can I get your take on this?

Thank you.



Submitted by tomd37 on Fri, 2019-02-15 04:29

How was the QCD distributed.  Was it a check issued by the investment holding company made payable to the qualified charity and mailed either to the taxpayer for forwarding to the charity or mailed directly to the charity (hopefully the former)?  Or was the check issued by the taxpayer written on an IRA account with checkwriting ablitiy and mailed to the charity by the taxpayer?I think in the first case it is considered a 2018 QCD if issued by 12/31/2018.  In the second case it may not necessarily by considered a 2018 QCD if not cashed prior to 12/31/2018.  I would think you would need proof of when it was cashed by the charity to be a positive 2018 QCD.Those are only my thoughts and I suspect Alan S. will advise us all.  Tom D.

Submitted by Alan - IRA critic on Sat, 2019-02-16 04:04

  • There is no direct IRS guidance or enforcement record regarding year end timing for QCD delivery. Michael Kitces sums up the situation with the following paragraph from his blog.
  • “End Of Year Deadline For IRA Charitable ContributionsIn order to receive favorable treatment for a QCD in the current tax year – including having the RMD satisfied for the current tax year, and falling under the current year’s maximum QCD contribution limit – the charity should ideally cash the QCD check by December 31st. In practice, this means beginning the process to complete the QCD by mid-December, as most IRA custodians will insist that the check be payable to the charity but still mail it to the IRA owner first (who must then forward it on to the charity); to get the check payable to and sent directly to the charity will in most cases require a Medallion guarantee (a similar but more stringent process than getting a signature notarized), which usually has to be mailed in once completed (creating even further delays).Notably, there is still some debate about what exactly constitutes a completed donation in the case of a QCD in order to meet the end-of-year deadline. Some have suggested that the charity merely needs to receive the check by December 31st – such that the charity is in constructive receipt of the distribution – even if the check isn’t cashed until after the end of the year. And Treasury Regulation 1.170A-1(b) stipulates that when a normal (non-IRA-related) check contribution is made to a charity, the date that the check is mailed is sufficient (even if not received by the charity until after the end of the year); in theory, this might be applied for a direct distribution of the charitable distribution from the IRA to the charity (if a Medallion signature is obtained) based on the date that the IRA custodian cuts the check.”However, these interpretations have never been applied directly to evaluate the deadline for making an IRA charitable distribution, so ideally the check itself should be deposited by the charity by December 31st – and clearly shown as a completed distribution on the end-of-year IRA statement – to ensure credit in the proper tax year.

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