Secure Act, QCDs and TIRA Contributions

Submitted by Brian Devers on Mon, 2020-01-20 20:19

Thanks for all the information on the new SECURE ACT. Two (2) questions have come up.
1. Taxpayer can do QCDs from an Inherited IRA Account if 70 1/2 and older.
Can taxpayer make a deductible IRA contribution to their own TIRA with no effect to the QCD amount?

2. Cumulative deductible IRA contributions reduce any QCD amount from a taxpayer’s TIRA.
Any consequence if QCDs are done for a number of years and then deductible IRA contributions made?



Submitted by David Mertz on Mon, 2020-01-20 21:05

  1. That’s an interesting question.  It seems that the answer is No and that a deductible contribution that the individual over age 70½ makes to their own traditional IRA *would* reduce the amount of a distribution from the inherited IRA that they could claim as a QCD (and seems reasonable to me).  With regard to the anti-abuse provision the SECURE Act does not distinguish between distributions paid to charity from the individual’s own IRAs and from the individual’s inherited IRAs.
  2. No, there is no retroactive effect on QCDs made in years prior to the year of the deductible contribution.

Submitted by Alan - IRA critic on Mon, 2020-01-20 23:03

  1. Good question. A review of the wording of Sec 107 of Secure indicates that the reduction of QCD would apply to an inherited IRA in the same manner as an owned IRA. If the taxpayer had both an owned IRA and inherited IRA, they could make the deductible contribution to the owned IRA and do the QCD from the inherited IRA, which would accomplish the same result that Congress chose to avoid. Therefore, the QCD reduction would still apply.
  2.  No consequence. Sec 107 indicates that the reduction only applies to QCDs made in the same year or later years than the contributions. Contributions done later do not reduce QCDs if there are no more QCDs done since the contribution funds could not be used to make the earlier QCDs.
  3. Above response typed without seeing DMx response. Both response conclusions concur.

Submitted by Brian Devers on Tue, 2020-01-21 02:10

Thanks much; still working our way through potential issues.

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