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Thanks -

Your responses are as expected. I was hoping for a loophole. :)

PW
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So at the moment, for me, it would be an RMD is required beginning April 1 the year after I turn 72* because my birthday is in August and must be complete by Dec 31 of that year?

Required Minimum Distributions can be taken on 01 January of the year of your 72nd birthday. The RMD should be taken by 31 December of that year; however, you are allowed to delay taking your first RMD until 01 April of the following year. Doing so requires you to take 2 year's of RMD in a single year.

Qualified Charitable Distributions can be taken on 01 January of the year you reach 70.5 years of age. As this is the first year that I made a QCD, I don't know how it is reported on the 1099-R received from the IRA custodian. I assume that the custodian will reduce the taxable amount of the distribution by the amount of the QCD.
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Qualified Charitable Distributions can be taken on 01 January of the year you reach 70.5 years of age. As this is the first year that I made a QCD, I don't know how it is reported on the 1099-R received from the IRA custodian. I assume that the custodian will reduce the taxable amount of the distribution by the amount of the QCD.

Not quite. You must already have reached the age of 70 1/2 when you request the QCD distribution, otherwise it is an ordinary distribution subject to the usual rules regarding how much is taxable and how much is return of basis. Secondly, IRA custodians do not report QCDs on the 1099-R. They report the distribution as if it were an ordinary distribution. You are responsible for making the appropriate entries on your tax return to indicate that the distribution was a QCD and not subject to income tax.

Ira
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Does this also mean that I would not be able to do a QCD until the year after I turn 72 as well ?

As already mentioned, QCDs can be taken once you turn 70 1/2. Since you were born in August, that would be in February or March of the year you turn 71, depending on when during August your birthday falls, which can help to decrease RMDs when they do start. Be sure to wait to initiate the QCD until you are actually 70 1/2.

And a QCD will not count as income ? How about for the Medicare surcharge?

QCDs do not count toward AGI.
Under current law, MAGI for IRMAA is calculated by adding AGI and any tax-exempt interest, but not QCDs.

You should work with your broker to ensure that the QCD is sent directly to the charity, so it is a QCD, rather than a deductible charitable contribution. QCDs are limited to $100k per year.

AJ
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Thank you all - this is helpful. I'm not Mackenzie Scott but it will definitely be fun.
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AJ and others,

I have a related and very specific inquiry that I can't find a definitive answer to.

I know that we are required to wait until 70 1/2 to do a QCD. In my case, I have been taking RMDs on an inherited IRA since 2015 and the amount is tied to my age/longevity. The RMD is $1,500 against a $31,000 value. Since RMDs have begun, is it possible to match a QCD with the annual RMD? Or, is the primary prerequisite being 70 1/2 regardless of the RMD status?

Like the OP, I plan to use QCDs extensively to work down our traditional IRA value. The sooner I can started, the better!!

Thanks.
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While the age for QCDs initially was set the same as for RMDs of traditional IRAs, it was not changed when the starting age for RMDs was changed. The two ages are independent. Just because you might be taking an RMD for an inherited IRA, it doesn't create the opportunity for "early" QCDs.

Ira
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Since RMDs have begun, is it possible to match a QCD with the annual RMD?

Not unless you're at least 70 1/2, which is the minimum age to qualify for QCDs. The age for QCDs is separate from any RMD requirement, as shown by the fact that when the SECURE Act increased the age for RMDs from Traditional IRAs to 72, it didn't change the age for making QCDs. Taking an RMD from an inherited IRA doesn't make you eligible to make QCDs.

AJ
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Thanks -

Your responses are as expected. I was hoping for a loophole. :)

PW
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A couple of other comments:
1.) QCD is limited to $100,000 but can exceed the RMD.
2.) Some administrators issue a checkbook for IRAs then you can directly write a check to the charity. You must verify that the charity qualifies for the QCD or it is considered a regular distribution.
3.) Not certain if you can partially delay the first RMD.
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You should work with your broker to ensure that the QCD is sent directly to the charity, so it is a QCD, rather than a deductible charitable contribution. QCDs are limited to $100k per year.

Not necessarily. The institutions that I use, mail the QCD check (made out to the charitable organization) directly to me. I then mail (etc) to the organization, after scanning everything for my tax records.


🆁🅶🅱
post tenebras lux
For not in my bow do I trust, nor can my sword save me.
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