Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 19:05
If this is the first IRA of client, the first RMD is due by 12/31/2023 calculated from the 12/31/2022 balance. But if this IRA was funded by a rollover from another IRA, the client must have completed that RMD before rolling over the additional amount. Note that the so called RBD (4/1) of the year following age 72 only applies when the client is 72. Finally, client should note that if this is a regular contribution and is deducted on their return, it will offset the amount of future QCDs up to the amount of the deduction taken.
Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 22:03
The Secure Act eliminated age limit for TIRA contributions, allowing such contributions in the same years (ages 70.5 and up) for which QCDs can be made. Congress did not want new contributions to be made that would just be recycled as QCDs, so they included an “anti abuse” provision under which deductible TIRA contributions made at 70.5 or later would offset QCDs by an equal amount. For example, a 7k deductible contribution this year would reduce a 10k QCD made this year or later to 3k. Taxpayer would have to track the deductible contribution amounts, the QCDs, and the reduced balance of deductible contributions after QCDs were offset. These reductions do not apply for ND contributions or Roth contributions because QCDs are allocated to the pre tax IRA balances. This is another complex feature of the Secure Act.
Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 19:05
If this is the first IRA of client, the first RMD is due by 12/31/2023 calculated from the 12/31/2022 balance. But if this IRA was funded by a rollover from another IRA, the client must have completed that RMD before rolling over the additional amount. Note that the so called RBD (4/1) of the year following age 72 only applies when the client is 72. Finally, client should note that if this is a regular contribution and is deducted on their return, it will offset the amount of future QCDs up to the amount of the deduction taken.
Permalink Submitted by Amanda Minter on Tue, 2022-12-06 21:10
Can you detail a bit more on your last statement?
Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 22:03
The Secure Act eliminated age limit for TIRA contributions, allowing such contributions in the same years (ages 70.5 and up) for which QCDs can be made. Congress did not want new contributions to be made that would just be recycled as QCDs, so they included an “anti abuse” provision under which deductible TIRA contributions made at 70.5 or later would offset QCDs by an equal amount. For example, a 7k deductible contribution this year would reduce a 10k QCD made this year or later to 3k. Taxpayer would have to track the deductible contribution amounts, the QCDs, and the reduced balance of deductible contributions after QCDs were offset. These reductions do not apply for ND contributions or Roth contributions because QCDs are allocated to the pre tax IRA balances. This is another complex feature of the Secure Act.