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December 27, 2010

Charitable Donations from IRAs Extended to 2011


President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 on Friday, December 17, 2010, which includes a provision that extended the qualified charitable distribution (QCD) provision. The QCD provision applies to  IRA owners and beneficiaries (with inherited IRAs) who are at least age 70 ½ when the distribution occurs from their IRA. This Act extends the QCD provision until December 31, 2011, from December 31 2009.

Special Provision for 2010 QCDs
Because the Act was passed late in 2010, it included a provision for a one-month extension for 2010 QCDs. Under this provision, eligible individuals can take 2010 QCDs up to January 31, 2011 and elect to treat it as a 2010 QCD for tax purposes.  As a result of this provision, a QCD made in January 2011 is permitted to be:
  1. treated as made in the taxpayer’s 2010 taxable year and therefore  permitted to count against his/her 2010 $100,000 QCD limit, and
  2. treated as made in the 2010 calendar year and permitted to be used to satisfy the taxpayer’s RMD for 2010.
It is anticipated that the IRS will provide instructions on how the taxpayer can make this election.
For more on QCDs, see the article Donating Retirement Assets to Charities

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