QCD Reporting and the Once-Per-Year Rollover Rule: Today’s Slott Report Mailbag

Thursday, February 16, 2023

By Ian Berger, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

Hi,

Thank you for all the helpful insight on retirement. I wish I heard about your website earlier. I turned 72 last year and followed your advice on QCDs (qualified charitable distributions) but don’t know how to claim it.

My RMD (required minimum distribution) was $50k in 2022. I did a QCD of $10k and then withdrew $40k by the end of 2022. My taxable amount should be $40k and not $50k as listed on the 1099-R. How do I reflect that in my tax filing?

Thank you for your assistance.  

Elly

Answer:

Hi Elly,

Thanks for the kind words. This is a question that trips up a lot of people. That’s because custodians are not required to indicate on the 1099-R which part of the annual IRA distribution was a nontaxable QCD. Instead, it’s up to you to show that on the 1040. In your case, enter $50,000 on line 4a (“IRA distributions”), but only $40,000 on line 4b (“Taxable amount”). You must also enter “QCD” next to line 4b. (Tax preparation software should handle that for you.)

Question:

Is there a limit on the number of IRA rollovers you can do in a given year? Are the rules different for trustee-to-trustee transfers?

Thanks,

Paul

Answer:

Hi Paul,

Yes, there is a limit. You can’t do a rollover of a distribution that you received within 12 months of a distribution that you previously rolled over (i.e., the “once-per-year rollover rule”). This limit applies across all your IRA accounts. It applies to traditional IRA-to-traditional IRA rollovers and Roth IRA-to-Roth IRAs, but not to company plan-to-IRA rollovers, IRA-to-plan rollovers or traditional IRA-to-Roth IRA rollovers/conversions. You can avoid this rule entirely by doing trustee-to-trustee (direct) transfers, rather than 60-day rollovers. There’s no limit on transfers.

 

 

New Episodes of the Great Retirement Debate Podcast with Ed Slott and Jeffrey Levine, Airing Every Thursday!

In this week’s episode of the Great Retirement Debate, Ed and Jeffrey debate SECURE Act 2.0 once again for part 2 of whether it’s big deal, or not a big deal for you, the consumer. This time around, the focus is on the Roth related provisions.

You can stream The Great Retirement Debate at greatretirementdebate.com or on all major streaming platforms.

 

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