Qualified Charitable Distribution from IRA

[DonPriebe]

Has anyone seen any details on how the mechanics of the QCD will work? The only thing I've seen is that the gross amount goes on 15a, the taxable (if any) on 15b, and "QCD" on the dotted line. Nothing on Schedule A. Is there a 1099-R and is it coded in any special way? (The 2006 1099-R instructions don't seem to mention anything about QCDs). Pub 590 hasn't been issued yet.

Second part - has anyone seen any indication that the IRA custodians are ready to go with this? (The effective life of the law is half gone already.) Fidelity, Vanguard, Price, Janus, etc. mention QCD on their websites but don't seem to have any details or forms. I have a class full of seniors that are interested.

[Gene V]

I haven’t seen any rules on the transfer either, but you are correct in the way you report it, gross goes on line 15a with QCD written on dotted line. I would think you would get a 1099-R with code G, maybe they will add another letter or number to box 7 to show that it was a direct rollover to a charitable organization. You also must obtain written substantiation of each IRA rollover contribution from the recipient charity.

I suppose the transfer from the IRA custodian would be no difference than transferring from one custodian to another. I would make sure that the transfer was a direct transfer and I got a written acknowledgement from the charity.

Just found this on the IRS web site

Qualified charitable distributions. Section 1201 of the Pension Protection Act of 2006 allows certain account holders to direct a tax-free distribution to a qualified charity from a traditional IRA or Roth IRA. However, the trustee is not responsible for knowing if that charity is one described under section 408(d)(8) of the Internal Revenue Code. Therefore, follow the general rules for reporting distributions where the recipient is age 70 ½ or older. Enter code 7 in box 7 of Form 1099-R for these distributions. Do not use code F.

The corrected version of the 2006 Instructions for Forms 1099-R and 5498 (Rev. October 2006) is available for download (PDF version). -- 17-NOV-2006