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IRA Withdrawal Planning Strategies & the Qualified Charitable Distribution (QCD)


Congress made the Qualified Charitable Distribution (QCD) permanent in the tax code in the "Protecting Americans from Tax Hikes Act of 2015."

A QCD is a direct transfer from your IRA to a qualified charity (501(c)(3)). The QCD can be counted toward satisfying your required minimum distribution (RMD) for the year. By making a QCD in lieu of receiving a required minimum distribution you will lower your adjusted gross income which may impact certain tax credits and deductions, including lower taxable Social Security and lower Medicare premiums. Fewer taxpayers qualify for itemized deductions because of the changes to the standard deduction, reducing the tax impact of charitable deductions. A QCD is a way for you to benefit from the charitable deduction indirectly.

Traditional, Rollover and Inherited IRAs along with an inactive SEP and inactive Simple Plan are eligible for a QCD. A qualified employer plan that allows employees to make contributions to a "deemed IRA" also qualifies.

You must meet the following requirements for a charitable deduction to qualify:
• You must be 70 1/2 or older to be eligible to make a QCD.
• QCDs are limited to the amount that would otherwise be taxed as ordinary
income. This excludes non-deductible contributions.
• The maximum annual amount that can qualify for a QCD is $100,000. This
applies to the sum of QCDs made to one or more charities in a calendar year.
(If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.)
• For a QCD to count towards your current year's RMD, the funds must come out of your IRA by your RMD deadline, generally by December 31 .

Taxpayers may not take a deduction for any amount paid as a QCD. However, QCDs must satisfy the substantiation requirements. Contributions of $250 or more must be substantiated with a written acknowledgement from the donee organization.

Any amount donated above your RMD does not count toward satisfying a future year's RMD. There is no carryover provision for any amount not used in a given year.

Funds distributed and payable directly to you, the IRA owner, and which you then give to charity do not qualify as a QCD. A check payable to the charity and delivered by the IRA owner is considered a direct trustee payment.

Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans

529 College Savings Plans 

A 529 College Savings Plan is a great way to save for the cost of qualified college education costs. Under prior tax law, qualified expenses were limited to the cost of  post-secondary schools such as college or universities. 

Since 2017, tax reform has allowed the use of funds to include elementary and secondary expenses up to $10,000 per year. 

One of the benefits of saving for a child or grandchild's future education is that contributions are considered gifts for tax purposes. In 2019 the annual gift exclusion is $15,000 per individual. This means that you and your spouse can gift up to $15,000 each to each of your children or grandchildren per year. 

There is a 5-year election to "front loan" the plan. You may contribute up to $75,000 to a 529 plan in the current year and treat it as if it were paid over 5 years. The 5-year election must be reported on federal form 709 annual gift return. 

Under federal law there are maximum aggregate limits which vary by plan. The plan balances cannot exceed the expected cost of the beneficiary's qualified education costs. This amount ranges from $235,000 - $529,000 depending on the state. 

If the balance is close to the limit you are precluded from contributing anymore to the plan. Future earnings allow for the balances to exceed the limit. 

Although there is no federal income tax deduction for contributions to a 529 plan, certain states allow for income tax credit or deduction. 

The withdrawal of funds from a 529 plan and its accumulated earnings are tax free as long as the proceeds are used for qualified education expenses. 

Another benefit of 529 plans is that you are allowed to change the beneficiary to another qualifying family member. When deciding on a beneficiary be sure to avoid skipping generations, which could trigger a tax penalty. 

Journal of Accountancy - Quick Guide for tax year 2018

Journal of Accountancy's Filing season quick guide for tax year 2018

Journal of Accountancy's Filing season quick guide for tax year 2018

Scam Alert for Connecticut LLCs

FYI: Scam Alert! Clients organized as Limited Liability Companies (LLCs) should beware of a form requiring a payment of a $110 annual report fee". No payments should be made to Workplace Compliance Services, please refer to link above.

Required Minimum Distributions (RMD)


The Internal Revenue Service (IRS) requires taxpayers to withdraw minimum amounts from traditional IRAs & 401(k)s by age 70 ½. If you fail to withdraw at least the minimum requirement you may be subject to penalties.

Many taxpayers determine their withdrawals based on need and start prior to age 70 ½. We have seen many taxpayers continue to work past “normal” retirement age. This allows for the delay in the use of retirement funds.

Your required minimum distribution is calculated by taking your account balance at December 31st of the previous year and dividing it by your life expectancy.

We are providing you with a withdrawal schedule based on age and how much you need to take in order to meet the RMD. And please don’t forget, your RMD is subject to federal income taxes and in some cases state income taxes as well.

We would be happy to assist you in determining the appropriate income taxes to be withheld.

Table: Withdrawal percentages under the IRS required minimum ditritbution (RMD)

Age Payout rate
70 3.65%
71 3.77%
72 3.91%
73 4.05%
74 4.20%
75 4.37%
76 4.55%
77 4.72%
78 4.93%
79 5.13%
80 5.35%
81 5.59%
82 5.85%
83 6.13%
84 6.45%
85 6.76%
86 7.09%
87 7.46%
88 7.87%
89 8.33%
90 8.77%
Tax Alerts
Tax Briefing(s)

Aydely Santiago-Taiman, CPA, CVA, MBA, with the firm of Fiorita Kornhaas & Company, PC has successfully completed the certification process with the National Association of Certified Valuators and Analysts® (NACVA®) to earn the Certified Valuation Analyst® (CVA®) designation. The CVA designation is granted only to individuals who have met a high bar or both prerequisite qualifications and passed a substantive examination testing both understanding of theory and the application of skills in the field of private company business valuation.


The Senate has approved a bipartisan IRS reform bill, which now heads to President Trump’s desk. Trump is expected to sign the bill into law.


Taxpayers may rely on two new pieces of IRS guidance for applying the Code Sec. 199A deduction to cooperatives and their patrons:


The IRS has issued final regulations that require taxpayers to reduce the amount any charitable contribution deduction by the amount of any state and local tax (SALT) credit they receive or expect to receive in return. The rules are aimed at preventing taxpayers from getting around the SALT deduction limits. A safe harbor has also been provided to certain individuals to treat any disallowed charitable contribution deduction under this rule as a deductible payment of taxes under Code Sec. 164. The final regulations and the safe harbor apply to charitable contribution payments made after August 27, 2018.


Final regulations address the global intangible low-taxed income (GILTI) provisions of Code Sec. 951A. The final regulations retain the basic approach and structure of the proposed regulations published on October 10, 2018. The final regulations address open questions and comments received on the proposed regulations.


Newly issued temporary regulations limit the application of the Code Sec. 245A participation dividends received deduction (the participation DRD) and the Code Sec. 954(c)(6) exception in certain situations that present an opportunity for tax avoidance. The temporary regulations also provide related information reporting rules under Code Sec. 6038.


Final regulations reduce the Code Sec. 956 amount for certain domestic corporations that own stock in controlled foreign corporations (CFCs). The regulations are intended to ensure that Code Sec. 956 is applied consistently with the participation exemption system under Code Sec. 245A.


Final rules allow employers to use health reimbursement arrangements (HRAs) to reimburse employees for the purchase individual insurance coverage, including coverage on an Affordable Care Act Exchange. The rules also allow "excepted benefit HRAs," which would not have to be integrated with any coverage. The rules generally apply for plan years starting on or after January 1, 2020.


Final regulations provide requirements that a person must satisfy to become and remain a certified professional employer organization (CPEO), as well as the CPEO’s federal employment tax liabilities and other obligations.