Permalink Submitted by Alan - IRA critic on Mon, 2014-06-02 18:42
Not yet – discussions continue in Congress, but the closer we get to the elections the more likely that nothing will be done until after the election. Last two QCD extensions have been done in December, retroactive to the prior 1/1. Looks like that pattern will continue, as inefficient and frustrating as it is.
Permalink Submitted by Maria Difalco on Wed, 2014-06-04 02:11
Alan-I still have no response from any Colorado person about HR3474. I’m confused as to how ‘retroactive’ works. Let’s say my RMD is due in June. No QCD decision, so entire amount is paid to me. In December QCD’s are approved. How do I make transition from a totally taxable situation to non taxable? I thought monies needed to be sent directly to charity before I received balance of RMD. With this late decision I would now have to write a personal check to the charity. I feel as if I am missing a link here. Thanks, brndflc
Permalink Submitted by Alan - IRA critic on Wed, 2014-06-04 02:44
An RMD is always due by 12/31, no sooner. Of course, you can take it earlier if you wish, but if you take a non QCD distribution that distribution must be applied to your RMD. Later on if the QCD is approved retroactively, if you had actually done a QCD earlier it would count toward your RMD, but a distribution directly to you cannot be changed and treated like a QCD. So if you took a June distribution, you could also do a later QCD, but that QCD would not apply to your RMD to the extent of the June distribution. In a nutshell, this means that if you want the QCD to cover your entire RMD, you have to either wait until it is approved, OR you have to process the earlier distribution as a QCD and just hope it gets approved retroactively. If you do the QCD now and it is NOT extended retroactively, then the distribution is reported as if paid to you and you then wrote a check to the charity. In this situation you could itemize the charitable deduction against your IRA distribution, but that will not save you as much as an actual QCD, which is not included in your income at all. This is all very confusing, which is all the more reason that there is no excuse for Congress to be conducting legislation in this manner. They need to either make the QCD permanent or just let it lapse in 2013.
Permalink Submitted by William Hammond on Thu, 2014-06-05 15:13
FYI the May 9th Kiplinger Tax Letter stated that the Charitable IRA would be reinstated.I have more faith in this publication than Kiplinger so be sure to check before implementing. BHAM
Permalink Submitted by Maria Difalco on Wed, 2014-06-11 01:37
Alan: If I understand your note–I must declare QCD prior to distribution of RMD and have company make out checks to charities before check is made to me for balance of RMD. If there is no retroactive provision made then the contributions are listed on Schedule A as normal deduction. Also amounts must be included in gross income. I’ll also have to look at the 20%, 30% and 50% rule for deductions.Thanks, M
Permalink Submitted by Alan - IRA critic on Wed, 2014-06-11 02:57
Yes, that order would be fine. However, since your QCD is less than your RMD, you could also take out the non QCD portion of the RMD first and then do the QCD. You could not do that if you wanted the QCD to cover your entire RMD. If QCD is not extended retroactively, the order would not matter because the check made out to the charity would have to be reported as paid to you, and you would then itemize the amount the charity received, which of course is not as tax effective as the QCD would be. I don’t think there is much chance the QCD would be extended but not retroactively. It will most likely be either extended retroactively or not extended at all.
Permalink Submitted by Alan - IRA critic on Mon, 2014-06-02 18:42
Not yet – discussions continue in Congress, but the closer we get to the elections the more likely that nothing will be done until after the election. Last two QCD extensions have been done in December, retroactive to the prior 1/1. Looks like that pattern will continue, as inefficient and frustrating as it is.
Permalink Submitted by Maria Difalco on Wed, 2014-06-04 02:11
Alan-I still have no response from any Colorado person about HR3474. I’m confused as to how ‘retroactive’ works. Let’s say my RMD is due in June. No QCD decision, so entire amount is paid to me. In December QCD’s are approved. How do I make transition from a totally taxable situation to non taxable? I thought monies needed to be sent directly to charity before I received balance of RMD. With this late decision I would now have to write a personal check to the charity. I feel as if I am missing a link here. Thanks, brndflc
Permalink Submitted by Alan - IRA critic on Wed, 2014-06-04 02:44
An RMD is always due by 12/31, no sooner. Of course, you can take it earlier if you wish, but if you take a non QCD distribution that distribution must be applied to your RMD. Later on if the QCD is approved retroactively, if you had actually done a QCD earlier it would count toward your RMD, but a distribution directly to you cannot be changed and treated like a QCD. So if you took a June distribution, you could also do a later QCD, but that QCD would not apply to your RMD to the extent of the June distribution. In a nutshell, this means that if you want the QCD to cover your entire RMD, you have to either wait until it is approved, OR you have to process the earlier distribution as a QCD and just hope it gets approved retroactively. If you do the QCD now and it is NOT extended retroactively, then the distribution is reported as if paid to you and you then wrote a check to the charity. In this situation you could itemize the charitable deduction against your IRA distribution, but that will not save you as much as an actual QCD, which is not included in your income at all. This is all very confusing, which is all the more reason that there is no excuse for Congress to be conducting legislation in this manner. They need to either make the QCD permanent or just let it lapse in 2013.
Permalink Submitted by William Hammond on Thu, 2014-06-05 15:13
FYI the May 9th Kiplinger Tax Letter stated that the Charitable IRA would be reinstated.I have more faith in this publication than Kiplinger so be sure to check before implementing. BHAM
Permalink Submitted by Alan - IRA critic on Thu, 2014-06-05 15:41
Here we go again – forget it until the lame duck session: http://www.cchgroup.com/wordpress/index.php/tax-headlines/federal-tax-headlines/tax-extenders-bill-likely-stalled-until-november-says-reid/
Permalink Submitted by Maria Difalco on Wed, 2014-06-11 01:37
Alan: If I understand your note–I must declare QCD prior to distribution of RMD and have company make out checks to charities before check is made to me for balance of RMD. If there is no retroactive provision made then the contributions are listed on Schedule A as normal deduction. Also amounts must be included in gross income. I’ll also have to look at the 20%, 30% and 50% rule for deductions.Thanks, M
Permalink Submitted by Alan - IRA critic on Wed, 2014-06-11 02:57
Yes, that order would be fine. However, since your QCD is less than your RMD, you could also take out the non QCD portion of the RMD first and then do the QCD. You could not do that if you wanted the QCD to cover your entire RMD. If QCD is not extended retroactively, the order would not matter because the check made out to the charity would have to be reported as paid to you, and you would then itemize the amount the charity received, which of course is not as tax effective as the QCD would be. I don’t think there is much chance the QCD would be extended but not retroactively. It will most likely be either extended retroactively or not extended at all.
Permalink Submitted by Maria Difalco on Fri, 2014-06-13 03:31
As always, thanks. M