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NEW REPORTING FOR 2025 QCDS |
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By Sarah Brenner, JD |
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The IRS has introduced a new code for the reporting of qualified charitable distributions (QCDs) by IRA custodians on Form 1099-R. How QCDs Work QCDs first became available in 2006, and they were made permanent in 2015. The strategy has become increasingly popular among IRA owners who are charitably inclined. With a QCD, IRA owners or beneficiaries who are at least age 70½ make a tax-free donation to charity directly from their IRA. An important benefit of a QCD is that it can be used to satisfy a required minimum distribution (RMD). |
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Q: |
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Q: Thank you for all you do to educate the public. I’m hoping you guys can settle a debate that’s been going on with a few financial advisors and CPAs regarding the 5-year rule for Roth IRA conversions. I was under the impression that a non-taxable conversion can be withdrawn at any time, even within 5 years of the “backdoor” contribution/conversion, without a 10% penalty.
My personal CPA is adamant that the 10% penalty would apply to a withdrawal of the backdoor conversion amount, but I don’t see why, or where that opinion is supported. Can you please help settle this debate? |
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Our client is 75 years old. He just retired on January 1, 2025. The company has recognized his retirement date as being January 1, 2025.
When must he take his first required minimum distribution (RMD)? |
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Q: My wife and I created a Roth IRA when our two children were young to pay for their college education. Our daughter is finishing her second year of school, and our son will be entering college this fall. We have withdrawn $30,000 so far from our contributions to pay her expenses. The current value of the Roth IRA is over $150,000. Our remaining contributions are around $70,000. I’ve been told that I can only withdraw our contributions without tax or penalty and cannot touch the earnings generated unless I pay the income tax. Is this true, or can we use the entire value for the qualified expense? My wife and I are 55 and 54 years old. |
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Have a question for America's IRA Experts? |
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Join us at our upcoming 2-Day IRA Workshop in July for up-to-the-minute education. More than four years after the SECURE Act took effect upending many longstanding retirement rules, the IRS has finally released its long-anticipated final regulations providing new clarity on these complex tax rules—plus, proposed regulations for SECURE Act 2.0! These significant changes are crucial for all advisors to understand and discuss with clients now! |
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Timely, Advanced Retirement Planning Education |
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For financial pros looking to gain a competitive advantage with their professional knowledge, subscribe to Ed Slott's IRA Advisor and our new Heather Schreiber’s Social Security Advisor monthly newsletters! |
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