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Qualified Charitable Distribution
Renewed for 2010 & 2011
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more company information,
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PrincipalTrust.com.
For more information on our retirement
services and on self-directed accounts, call
us at 800.209.9010. |
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January/February
2011
The
Qualified Charitable Distribution (QCD) provision introduced
in 2009, allowing individuals age 70½ or over
to exclude up to $100,000 from their gross income if
paid directly from their individual retirement accounts
(excluding SEP or SIMPLE IRAs) to a qualified
charity, has been renewed. The excluded amount can
be used to satisfy any Required Minimum Distributions
(RMDs) that the individual must otherwise receive from
their IRAs for 2010 and 2011.
2010
QCD
The
deadline for making a 2010 QCD has passed (January 31,
2011). The election to treat a January 2011 QCD
as having been made in 2010 would be
made by including the QCD on the individual's
2010 income tax return. The IRA owner would
report the full amount of the QCD (even if in excess
of $100,000) made in January 2011 on line 15a;
but would not include any amount on line 15b.
Instead they should write "QCD" next to that
line.
Disclaimer
To
qualify as a QCD, the IRA trustee must make the distribution
directly to the qualified charity. Any distributions,
including any RMDs, which the IRA owner actually
receives cannot qualify
as QCDs. Likewise, any tax withholdings on behalf of
the owner from an IRA distribution cannot qualify as
QCDs.
Important
Note
IRA owners who have received their 2010 RMDs may not
recontribute those distributions to an IRA to have them
redistributed directly to a qualified charity as a QCD.
However, if an IRA owner received a distribution in
excess of his or her 2010 RMD, the owner can roll the
excess to another or the same IRA within 60 days of
receiving the distribution and then have the funds paid
directly to the qualified charity as a QCD.
Reporting
- Distributions
from an IRA in 2010, including any 2010 QCDs made
on or before December 31, 2010, should be reported
on a 2010
Form 1099-R.
- Any distributions from an IRA in 2011, including any 2010 QCDs made on or before January 31, 2011, should be reported on the 2011 Form 1099-R.
- To determine the amount of the 2011 RMD, subtract the full amount of the 2010 QCD made in January 2011 from the total of the individual's December 31, 2010 IRA account balance(s).
- Important: If the IRA owner made the QCD from a traditional IRA in which the owner had basis and received a distribution from the IRA in 2010, they may have to file Form 8606, Nondeductible IRAs, with their 2010 tax return.
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Copyright
© 2011 Principal Trust Company, 1013 Centre Road, Wilmington,
Delaware 19805
Disclosures and Terms of Use | Privacy and Security
Securities offered through Princor Financial Services Corporation, member SIPC
While
this communication may be used to promote or market a transaction
or an idea that is discussed in the publication, it is intended
to provide general information about the subject matter covered
and is provided with the understanding that Principal Trust
is not rendering legal, accounting, or tax advice. It is not
a marketed opinion and may not be used to avoid penalties under
the Internal Revenue Code. You should consult with appropriate
counsel or other advisors on all matters pertaining to legal,
tax, or accounting obligations and requirements.
Principal
Trust CompanySM is a trade name of Delaware Charter
Guarantee & Trust Company, a member company of the Principal
Financial Group®.
"The Principal," "Principal Financial Group," the Edge Design and "We'll Give You An Edge" are registered service marks and the illustrated character is a service mark of Principal Financial Services, Inc.
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