December QCD

Submitted by Tracy Hawbaker on Fri, 2020-12-11 14:42

Trying to read/understand QCD rules for 2020. I have a client that has already distributed $140,000 ($100,000 net) from his IRA this year. He takes $100,000 each January and uses the proceeds for living expenses over the course of the year and then has Federal and State tax withheld later in the year when his taxes are completed. He is wanting to donate $25,000 to a qualified charity. I explained that he would not get the tax benefit if he did it before year-end in 2020 and would be better off waiting until January 2021and making the gift (prior to his RMD). Just hoping for clarification.



Submitted by tomd37 on Fri, 2020-12-11 16:30

I did a similar QCD earlier this year.  I weighed the tax benefits of delaying the QCD until 2021 and then doubling the contributions early in the new year.  But in the end I decided the need for charitable donations in 2020 was more important to the charities than the tax hit I took.  I am working on my QCD list now for 2021.This late in the tax year I agree with you and suggest he wait until early 2021, but make sure he takes the 2021 QCDs before his total RMD. Sequence timing is very important.  

Submitted by Tom Castillo on Fri, 2020-12-11 19:21

One of my clients was advised QCD is only available at RMD age(72). Can clients 70.5 still take advantage of QCD?

Submitted by Alan - IRA critic on Fri, 2020-12-11 19:50

Tom probably meant “on or before the date of the QCD”.

Submitted by tomd37 on Fri, 2020-12-11 22:39

QCD eligibility remains at 70.5, but the contributor must have reached age 70.5 on or before the date of the contribution.   Tom D.                  Edited to read before versus after as originally incorrectly stated. 

Add new comment

Log in or register to post comments