rjs
Level 15
Level 15

Retirement tax questions

@VolvoGirl  @NCperson 

 

The new distribution code Y, and the very sparse IRS instructions, raise a lot of questions. There is no place on the 2025 Form 1099-R to indicate how much of the total distribution in box 1 is a QCD and how much is not a QCD. And the IRA custodian is not really able to determine whether a distribution is a valid QCD. The custodian cannot be expected to determine whether an organization that a distribution is sent to is a qualified charity. Also, the custodian cannot determine whether the taxpayer has exceeded the maximum QCD amount for the year, since the taxpayer could have IRA accounts with other custodians.


From what we know now, it is likely that some valid QCDs will not be reported with code Y, and some distributions that are reported with code Y will not be valid QCDs. TurboTax is going to have to make provisions for such situations.


We await more detailed guidance from the IRS.