QCD question

Submitted by Arthur Dicker on Mon, 2016-12-12 21:58

Taxpayer requests IRA custodian to issue check payable to charity, but deliver check to taxpayer, who will send it on to charity. Custodian issues check before year-end, but taxpayer doesn’t mail it to charity until Jan. 2 of following year. Does it count as a QCD?



Submitted by tomd37 on Mon, 2016-12-12 22:45

As long as the custodian’s check made payable to the charity is dated on or prior to the last day of the year it will count as a QCD.  However you might have a problem with the receipt from charity as they will most likely show it a a contribution on the date it was received and the two tax years will not match. Tom D.

Submitted by Alan - IRA critic on Tue, 2016-12-13 00:45

  • Technically, the IRS would probably consider this check  late and therefore a non QCD distribution and donation in the following year. The time of a contribution for a QCD is determined in the same manner as a non QCD check mailed to a charity.  Pub 526 indicates that the year of a contribution of a check to a charity is determined by the date the check is mailed to the charity. That said, barring unusual activity the IRS is not going to question the 1099R reporting the distribution and if the IRS requests a copy of the receipt they are not likely to be concerned that the receipt is dated in February because many charities are not staffed to issue receipts immediately. Typically, the 1099R is issued based on the distribution date of the check and may set up a Holiday caused delay for the taxpayer to receive the check  plus another day or more for the taxpayer to re- mail it to the charity. Accordingly, I would get these checks in the mail before year end because delinquent QCD extensions Congress passed in December in prior years no longer provide an ideal excuse now that the QCD has been made permanent.
  • For the time being Michael Kitces suggests a possible gray area in this article, basically by taking the position that the mailing date of the IRA custodian to the taxpayer might be considered to constitute mailing to the charity but just re routed through the taxpayer due to custodian processing procedures. However, Kitces suggests that the charity should actually receive the check which would be later than the last mailing. https://www.kitces.com/blog/qualified-charitable-distribution-qcd-from-ira-to-satisfy-rmd-rules-and-requirements/

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