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Qualified Charitable Distributions

Two years ago, I wrote about donating your IRA RMD (The required minimum distribution you must take from your traditional IRA if you are over 70-1/2). This effectively gave people who were charitable, had to take RMDs, and for the most part, weren’t itemizing their deductions. Congress dragged its feet on this rule for 2012 up until after the New Year, and the IRS has published the rules for those who wish to take advantage of this in 2012.

To take advantage of the QCD (Qualified Charitable Distributions) for 2012 is a bit tricky. If you took your RMD in December, 2012, you can donate any or all of it (up to $100K per person) to a charity and have it count as a 2012 QCD.

If you wish, you can make your 2012 QCD by having your IRA distribution paid directly to the charity. But note, if you wish to make a 2013 QCD, you must wait until after January.

Note also – If you forgot to take your RMD for 2012, this is a pretty cool way to avoid paying Uncle Sam a penalty, and letting your favorite charity be the richer. Recall, a missed RMD comes with a 50% penalty, so between the tax and penalty, you may have as little as 15% left. Time to help that local Vet’s Shelter.

I’ve offered a quick overview of this rule, if you wish to read more, Charitable Donations from IRAs for 2012 and 2013 is the link to the IRS press release.

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