January 12, 2020

SECURE Act of 2019 and QCDs Part I

If you’re charitable, 72 years old or more, and plan to contribute to your IRA,
you must read this first

  • QCD anti-abuse language in the new law, while fair, places extra record-keeping burden on donor-taxpayers
  • Beware of the tax trap that IRS has set for the uninformed and ill-advised
  • New law can be a win-win for diligent donor-taxpayers who heed our advice

As an unabashed proponent of the Qualified Charitable Distribution (QCD) tax strategy and author of QCDNow.com, upon learning that the new SECURE (Setting Every Community Up for Retirement Enhancement) Act extended the age for which working Americans can contribute to their IRAs, my first thought was how IRS was going to prevent financially-savvy retirees from double-dipping on the tax savings using QCDs. While tax and financial advisers to date have briefly mentioned the “anti-abuse rule” for Qualified Charitable Distributions etched into the new law, none have yet to explain the logic behind the rule and offer up a scenario or two for applying the rule to a typical (read: realistic) retiree’s tax situation. Until now.

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