2020 – End of Calendar Year Gift Ideas
By Tom Hull
Qualified Charitable Distributions (QCD) and Your Required Minimum Distribution (RMD) Accounts
Thanks to changes in the 2018 tax law, many of us are able to reap the benefits of an opportunity to receive a charitable deduction and take the full standard deduction at the same time. As you have heard, the SECURE Act enacted in late December 2019 raised the minimum age from 70.5 (technically April 1 of the year following the year a person attains the age of 70.5) to 72 years effective January 1, 2020, for required minimum distributions from IRAs and other applicable accounts. You can now wait until the age of 72 for the first RMD unless you were already required to take RMDs in 2019. Although the CARES Act waives required minimum distributions (RMD’s) for calendar year 2020, would you please consider the QCD option?
What is a Qualified Charitable Distribution?* (QCD)
Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 72 or over that is paid directly from the IRA to a qualified charity. The qualified charitable distribution is limited to $100,000 per IRA owner as of 2020. (*Source: www.irs.gov).
What is a Required Minimum Distribution?* (RMD)
Required Minimum Distributions (RMDs) are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 72 years of age (as of 1/1/20) or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 72, regardless of whether he or she is retired. (*Source: www.irs.gov)
For more information regarding Qualified Charitable Distributions and Required Minimum Distributions or other giving opportunities through the North Carolina Bar Foundation, please contact Louise Harris, Foundation Director, [email protected].
Please consult with your tax attorney or CPA for your specific circumstances.