Discussion:IRA - QCD, but 3 days before 70 1/2 !

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Discussion Forum Index --> Basic Tax Questions --> IRA - QCD, but 3 days before 70 1/2 !


Discussion Forum Index --> Tax Questions --> IRA - QCD, but 3 days before 70 1/2 !

Kareneemery (talk|edits) said:

4 February 2009
Evening! Client made distribution directly from IRA to qualified charity, but it was made about 3 days prior to his turning 70 1/2. He doesn't itemize and wants to show the distribution as non-taxable. He has all the documentation from the trustee that he needs to support the distribution as being to a qualified charity. Anyone run into this with a QCD made in the year that the taxpayer turned 70 1/2, but not actually BEFORE turning 70 1/2? I hate for him not to get benefit of the contribution.

Also, I believe it is correct that there is nothing on the 1099-R to show that this was a QCD -- shows with code 7, with amount of distribution in box 2b. Anyone know anything different?

Thanks for any thoughts.

Taxtips (talk|edits) said:

5 February 2009
It appears that he will be itemizing this year. I know of no exceptions to the 70 1/2 rule.

CATAXES (talk|edits) said:

5 February 2009
I think you are going to qualify. Most of the IRS age rules are based on the taxpayer's age at Dec 31.

Notax (talk|edits) said:

5 February 2009
Not in this case - must be 70 1/2 at the time of the contribution.

Joanmcq (talk|edits) said:

5 February 2009
Yeah, I had a question from a guy once that said "Its ok if you take the IRA distribution in the YEAR you turn 59 1/2, right? It doesn't matter I took the distribution about 3 weeks before I was 59.5? Yep sure did, and that doing before asking cost him about 8 grand.

RoyDaleOne (talk|edits) said:

5 February 2009
Miscellaneous Pension Protection Act Changes

Notice 2007-7

"IX. SECTION 1201 OF PPA `06 Section 1201(a) of PPA `06 adds §408(d)(8) to the Code, which is applicable to distributions made in taxable years 2006 and 2007. Under §408(d)(8), generally, if a distribution from an IRA owned by an individual after the individual has attained age 70 is made directly by the trustee to certain organizations described in §170(b)(1)(A), the distribution is excluded from gross income. The exclusion is only available to the extent that the distribution would otherwise have been includible in gross income, and §408(d)(8)(D) provides a special rule for determining the amount that would otherwise be includible in gross income. In addition, the exclusion applies only if the contribution would otherwise qualify for a charitable contribution deduction under §170 (without regard to the percentage limitations of §170(b)). A distribution that is eligible for this exclusion is called a qualified charitable distribution."

For what it is worth.......

Notax (talk|edits) said:

5 February 2009
My copy of Notice 2007-7 has a 1/2 after age 70:

Section 1201(a) of PPA '06 adds §408(d)(8) to the Code, which is applicable to distributions made in taxable years 2006 and 2007. Under §408(d)(8), generally, if a distribution from an IRA owned by an individual after the individual has attained age 70 1/2 is made directly by the trustee to certain organizations described in §170(b)(1)(A), the distribution is excluded from gross income. .

RoyDaleOne (talk|edits) said:

5 February 2009
Okay, my copy does not have 1/2.....@#@$#@

Notax (talk|edits) said:

5 February 2009
CCH and IRS website both have the 1/2.

What service are you using?

RoyDaleOne (talk|edits) said:

5 February 2009
Kleinrock

NYea (talk|edits) said:

5 February 2009
Here's what the IRC says.

(8) Distributions for charitable purposes.

(A) In general. So much of the aggregate amount of qualified charitable distributions with respect to a taxpayer made during any taxable year which does not exceed $100,000 shall not be includible in gross income of such taxpayer for such taxable year.

(B) Qualified charitable distribution. For purposes of this paragraph, the term “qualified charitable distribution” means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p) )—

(i) which is made directly by the trustee to an organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2) ), and

(ii) which is made ON OR AFTER the date that the individual for whose benefit the plan is maintained has attained age 70 1/2.

A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A) .

Kareneemery (talk|edits) said:

9 February 2009
Well, darn. I can see it mattering whether or not you were 59 1/2 before taking a distribution, but this just seems stingy on part of the IRS. It's a charitable contribution, after all. Anyway, thanks, all, for the input.

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