is an RMD paid to charity non-taxable?
If a client has the annuity company cut a check directly to a qualified charity as part of her RMD, isn’t that money non-taxable? She’s getting a 1099 for this donation.
Any info would be helpful.
If a client has the annuity company cut a check directly to a qualified charity as part of her RMD, isn’t that money non-taxable? She’s getting a 1099 for this donation.
Any info would be helpful.
Permalink Submitted by Alan Spross on Thu, 2008-02-28 01:09
A qualified charitable distribution must be either from an owned IRA or an inherited IRA. If an annuity is an IRA annuity, that’s OK, but not if the annuity was a NQ annuity. You mentioned RMD, so it probably IS an IRA annuity.
Even from an IRA, such a transfer will generate a 1099R, and it must be reported on line 15 of Form 1040, with “QCD” entered next to 15b. This is very similar to reporting an IRA rollover. It keeps the transfer out of the taxpayer’s AGI. See p 21 of the 1040 Inst regarding QCD reporting.
Presumably, the IRS has not developed a special distribution code for this due to the temporary nature of this provision. So the 1099R appears correctly issued.