Qualified Charitable Distributions – They Keep Going and Going

May 2013Articles For Your Benefit

Thanks to a provision first introduced by the Pension Protection Act of 2006, an individual who has attained age 70-1/2 may make a tax-free donation of up to $100,000 directly from his or her IRA to a qualified charity. Such a qualified charitable distribution (QCD) can be excluded from the IRA owner’s income and, in addition, can be used to satisfy any required minimum distribution for the year. The amount of the QCD which is excluded from gross income is not taken into account in determining any deduction for other charitable contributions.

Initially, the QCD option was available only in 2006 and 2007, but it has been extended multiple times, most recently under the American Taxpayer Relief Act of 2012, and it remains available at least through the end of the current year. Under the extension, any donation made through January, 2013, may be treated as a 2012 QCD. However, to the extent that a QCD made in January, 2013, is treated as a 2012 QCD, it may not be used to satisfy any portion of the required minimum distribution for 2013. Further, in determining the required minimum distribution for 2013, the 2012 QCD must be subtracted from the December 31, 2012, IRA account balance.