Qualified Charitable Distributions from IRAs: Limited Window of Time to Obtain Tax Benefit for 2012

In general, individual retirement account (IRA) owners over age 70 ½ are required to take annual required minimum distributions (RMDs) from their IRAs.  Starting in 2006, IRA owners could satisfy up to $100,000 of their RMD requirements by making “qualified charitable distributions” (QCDs) from their IRAs directly to qualifying charities, a category which generally includes most public charities but not private foundations.

Section 208 of the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013, extended the QCD provisions to 2012 and 2013.  Previously, the provisions had expired at the end of 2011.

The Act provides that IRA owners can choose to report QCDs made during January 2013 as if they occurred in 2012. In addition, IRA owners who received IRA distributions during December 2012 can contribute, in cash, part or all of the amounts distributed to eligible charities during January 2013 and have them count as 2012 QCDs.  However, it is imperative that the transfer to the charity take place no later than January 31, 2013.  Therefore, IRA owners who wish to take advantage of this relief will need to act quickly.

The text of the provision can be found here at pages 28-29.  Also, the IRS recently addressed this topic in IR-2013-6.

If you would like to discuss this further, please contact the author or your regular BNN advisor at 800.244.7444

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.