QCD’s from a SIMPLE or SEP IRA
Hello,
I saw the following item on the Slott Report from yesterday on QCD’s:
3. Eligible Retirement Accounts
You may take QCDs from your taxable IRAs funds. QCDs are also permitted from SEP and SIMPLE IRAs that are not ongoing. An ongoing SEP and SIMPLE plan is defined as one where an employer contribution is made for the plan year ending with or within the IRA owner’s tax year in which the charitable contributions would be made. QCDs are not available from an employer plan.
Can you elaborate on “An ongoing SEP and SIMPLE plan is defined as one where an employer contribution is made for the plan year ending with or within the IRA owner’s tax year in which the charitable contributions would be made.”
If the employer contributes to the SIMPLE IRA in 2019 and the employee is eligible to make a QCD then they could make the QCD from the SIMPLE? Sorry my firm only allows QCD’s from a Trad. IRA and IRA BDA and does not allow QCD’s from active SEP and SIMPLE IRA’s. So I was just looking what is considered active versus inactive.
Thank you ,
Permalink Submitted by Alan - IRA critic on Thu, 2019-11-21 23:01
As the quote you posted comes directly from Notice 2007-7 QA 36, the SEP and SIMPLE accounts are considered on going for 2019 if any contributions will be made for 2019. For example, since SEP contributions for the self employed are typically done in the CY following the tax year, a 2019 contribution made in 2020 for 2019 would disqualify a QCD directly from the SEP IRA account in 2019. I am assuming that the tax year is a calendar year in this example. Of course, the definition does not appear to eliminate a transfer from an on going SEP or SIMPLE IRA (after two years) to a traditional IRA and then distributing the QCD from the traditional account.