Qualified Charitable Distributions (QCD) for 2010
January 11, 2011
Both the Senate and House have now passed the new legislation, the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010". No doubt, President Obama will be signing the tax bill into law very soon.
One of the provisions in this new tax bill is the extension of Qualified Charitable Distributions.
The purpose of this memorandum is to advise our IRA custodian clientele that there will be a special rule for QCD's for 2010. Any QCD made after December 31, 2010, and before February 1, 2011, shall be deemed to have been made on December 31, 2010. That is, a qualifying accountholder will still be able to do a QCD for 2010 during January of 2011. The QCD rules allow an eligible person to make a QCD of $100,000 for 2010 and a QCD of $100,000 for 2011. The IRA accountholder has the right to make this election at such time and manner as prescribed by the Secretary of the Treasury (i.e. the Internal Revenue Service).
The rules applying to QCD's and required distributions are two separate rules. Where they interrelate is that a person is allowed to use his or her QCD to satisfy his or her RMD. In general, a person is eligible under both sets of rules only if he or she is age 70½ or older. A person can still do a QCD for 2010 even though he or she has already withdrawn his or her RMD for 2010.
Your IRA accountholders who are age 70½ or older will appreciate it if you inform them of this last minute law change. Many charitable organizations may benefit from these "late" QCD's. We have revised our QCD brochure.
You could include an insert in an upcoming mailing or add a note to your 2011 RMD notices. The revised deadline for 2010 QCD's is January 31, 2011. The deadline for a 2011 QCD is December 31, 2011. It is unclear if the deadline for 2010 RMDs has also been extended to January 31, 2011. The conservative approach is to do the QCD/RMD by December 31, 2010. It is also unclear if the IRS could or will create a special rule for IRA accountholders who have already taken their 2010 RMD, but in a manner that did not qualify as a QCD, so that it would now qualify as a QCD. For example, an individual would be allowed to make a special rollover into his or her IRA of the previously distributed 2010 RMD, and then make a QCD.
If you have any questions please call us at 800.346.3961.
Categories: Pension Alerts
