Fiscal Cliff Deal and RMDs

Submitted by Maureen E. Birmingham on Wed, 2013-01-09 15:14

I’m looking at the fiscal cliff deal’s special tax break that allows seniors to donate as much as $100,000 to a qualified charity before January 31, 2013 and have it satisfy all or part of their 2012 RMD.

In this situation, an individual died in March of 2012. She had previously been taking RMDs on an annual basis. She had not yet taken her 2012 RMD. Can the beneficiary take advantage of the QCD rules above and send a distribution to a qualified charity in January of 2013 in satisfaction of the deceased final RMD?



Submitted by Alan - IRA critic on Wed, 2013-01-09 20:21

Yes, as long as the beneficiary has reached 70.5 by the date of distribution. The QCD must be distributed as a direct transfer to the charity.

Submitted by Maureen E. Birmingham on Wed, 2013-01-09 20:50

Wouldn’t this still be considered the decedent’s RMD, even though the beneficiary has to pick up the income?  The decedent would have had until the end of January 2013 to fufill her RMD distributions had she survived.  The beneficiary in this case is younger than 70 1/2.

Submitted by Alan - IRA critic on Wed, 2013-01-09 23:00

    • The following is the only guidance from Notice 2007-7, Q 37:
    • Q-37. Is the exclusion for qualified charitable distributions available for
    • distributions from an IRA maintained for a beneficiary if the beneficiary has attained age
    • 70½ before the distribution is made?
    • A-37. Yes. The exclusion from gross income for qualified charitable distributions
    • is available for distributions from an IRA maintained for the benefit of a beneficiary after
    • the death of the IRA owner if the beneficiary has attained age 70½ before the
    • distribution is made.
    • The RMD is only the decedent’s with respect to the calculated amount, but once the decedent passes, the incomplete RMD becomes the sole responsibility of the beneficiary, and must be reported by the beneficiary. The inherited IRA becomes “maintained for the benefit of a beneficiary” as indicated in the Q 37 above. However, the beneficiary should have no trouble getting the 50% penalty waived if they file a 5329 indicating the reason they did not take the RMD last year and indicate the date the distribution was made up.

    Add new comment

    Log in or register to post comments