As we begin 2014, many of you who are charitably inclined have asked us about the status of QCDs (qualified charitable distributions). QCDs, known as charitable IRA rollovers, are a way of moving your IRA money tax-free to a charity.
First some back story: QCDs were first created by the Pension Protection Act of 2006. They were originally effective from August 17, 2006 through the end of 2007, and then Congress extended them through 2009 – and then through 2011. Last year, the American Taxpayer Relief Act of 2012 (ATRA), which was signed into law in January 2013, brought back QCDs once again. One of the provisions of ATRA was to provide retroactive treatment for QCDs for 2012 and to extend them through 2013.
Many of you have asked us if Congress will again reinstate QCDs for 2014, as they have so many times before. That’s anyone’s guess at this point, but because Congress has reinstated them so often since their inception in 2006, we’ll review the QCD rules in the hope that they are reinstated for 2014.
A QCD transfer is not taxable to you, and you won’t get a charitable tax deduction. You must be at least age 70 ½ when you do the transfer and you are limited to $100,000 per person, per year. If you’re married, you can each transfer up to $100,00 from your own IRAs for a total of up to $200,000 per couple. QCDs applied only to IRAs or inactive SEP and SIMPLE IRAs, not to employer plans. The contribution to charity would have had to be entirely deductible if it were not made from an IRA. There could be no benefit back to you.
Remember that QCDs expired at the beginning of 2014, but visit us often here at The Slott Report for further updates.
- By Joe Cicchinelli and Jared Trexler