Slott Report Mailbag: Can I Make a 2012 Charitable Distribution Before February 1, 2013?

The questions are rolling in, as consumers are trying to make sense of the American Taxpayer Relief Act of 2012. To help you in that quest, you should check out this article and video providing instant analysis and key points. You can also get more information on the special Qualified Charitable Distribution (QCD) rules in question one and learn more about how IRS is handling retirement planning as it relates to Hurricane Sandy victims in another question.

Enjoy this week’s Slott Report Mailbag! As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Find one in your area at this link.


I missed my RMD for 2012.


Can I make a charitable distribution before February 1, 2013 in the amount of my missed 2012 RMD ($100,000 or less) and avoid the 50% penalty?




Yes you can. Qualified charitable distributions (QCDs) were retroactively reinstated for 2012. Because the new law was passed in early 2013, a special rule allows a QCD to be made in January 2013 and have it count for last year, 2012. Basically, this rule allows you to treat a QCD made in January 2013 as if it were made on December 31, 2012. Because QCDs are tax-free IRA distributions, this special rule can be used to avoid the 50% penalty if you did not take all or part of your required minimum distribution in 2012.


Dear Ed Slott,

Due to Hurricane Sandy, does the IRS permit an individual to convert a 401(k) (or IRA) to a Roth IRA after December 31, 2012 and include such conversion in the 2012 tax year?

In other words, do they provide relief from that strict 12/31/12 deadline for conversion to Roth IRAs for those in eligible areas?


R. Birnbach

No. Conversions are taxable in the year the funds left the 401(k) or IRA. Therefore a 401(k) or IRA distribution received in November or December of 2012 can be converted to a Roth IRA within 60 days in 2013. However, there is no ability to take a withdrawal in 2013 and have the conversion taxed for 2012. While the IRS did postpone certain deadlines for Hurricane Sandy for things such as the 60-day rollover period, the distribution would still have to have been made in 2012.


I will turn 65 in July and go on Medicare. In 2011, I made a Roth IRA conversion that increased my 2011 income over $170,000. My income after that is under $170,000. It is my understanding that Medicare uses income from two years prior to increase Medicare premiums if the income exceeds $170,000. On that basis, will my Medicare premiums after I become eligible for it in July be increased for the balance of 2013? Is there a chance that since my income dropped below $170,000 in 2012 that I wouldn’t be charged the premium increase when Medicare covers me in 2013? Also, if I do have to pay the increased premium in 2012 and my income falls below that thereafter, will the premium increase go away for 2014 and thereafter?

Your assistance will be greatly appreciated.

Wayne Johnston

We do tell taxpayers who are considering a Roth conversion that the additional income from the Roth conversion could increase their Medicare Part B premiums just as it could impact items on the tax return such as deductions, credits, exemptions, and phase-outs. You would have to check with Medicare or with a tax planner with expertise in that area for the exact impact your conversion would have on your Medicare premiums.

-By Joe Cicchinelli and Jared Trexler


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