There are variables, but decedent related issues are the most complicated, so if this is limited to owners only, it can be more concise.

MUST DO:
Take out the correct RMD before the required beginning date which is 4/1 of the year following the year of age 70.5 attainment
a) If multiple plans, identify the RMD for each plan and for IRAs for each individual IRA account ( a sole spouse beneficiary more than 10 years younger has a lower RMD divisor than other IRA accounts)
b) For employer plans, for those still working, RMDs are not required unless 5% or greater owner of the firm or if the plan specifically requires all employees to take RMDs at 70.5

SHOULD DO:
1) Tax planning – determine whether to take the RMD in current year or defer them to the RBD year which would result in 2 taxable RMDs for the RBD year
2) Charitable tax planning – determine whether to make an IRA QCD which can include the RMD
3) Investment planning – determine which assets to sell to fund the RMD if cash desired or determine which assets to distribute in kind which would be more appropriate in a taxable account; for IRAs only determine which IRA accounts will fund the total RMD if you want to aggregate RMDs instead of taking the exact RMD from each IRA account.
4) While not RMD related, this is a good time to re verify that all beneficiary designations are correct and appropriate and that custodian’s records are accurate
5) If considering annuitizing an IRA, determine how RMDs will be handled for the year of annuitization
6) Since this may be the first distributions taken from traditional IRAs, be sure any prior non deductible basis is correctly documented on Form 8606; if not amend or file the 8606 forms retroactively.
7) Watch for Form 5498 or statements from IRA custodians indicating prior year end balance and/or RMD amount per account

MUST NOT DO:
1) Take any IRA distribution before your QCD if you want the QCD to cover the RMD (QCDs not yet extended beyond 2011)
2) Do any Roth conversion before the RMD has been separately satisfied for all TIRA, SEP and SIMPLE IRA accounts
3) Do any indirect IRA rollover until all IRA RMDs have been satisfied; direct T to T transfers are OK
4) Roll any IRA funds into an employer plan until all IRA RMDs have been satisfied
5) Roll over ANY portion of an RMD to any type of plan
6) Make any traditional IRA contribution FOR the year turning 70.5 or beyond; OK to make contribution IN the year turning 70.5 if FOR the prior year; OK to make spousal TIRA contribution for spouse not yet 70.5
7) If more than the RMD taken out, cannot get credit against future year RMDs

CAN DO:
1) Can still make Roth IRA contributions and spousal Roth IRA contributions with earned income
2) Can still convert to a Roth after RMD has been satisfied
3) Can still contribute to SEP and SIMPLE IRAs if working, despite having RMD requirements
4) Can still contribute to employer plans if working, even if RMDs are required from those plans
5) Can still roll employer plans to IRAs, but employer plan must hold out any RMD amount from the rollover

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Tom,
The IRS would not know unless they did an audit since they have no other way to know if the taxpayer’s self reporting on line 15 of Form 1040 is correct or not. Same situation as doing a Roth conversion prior to taking the RMD. One of the problems is that since the first distribution is deemed to include the RMD and an RMD is not eligible for rollover, you technically eliminate your option of having a QCD cover your RMD with no taxes due to the extent take distributions before the QCD. Am sure there are a few people who discover this error within 60 days and then roll the first distribution back to the IRA, but since the RMD is not rollover eligible, they have committed an infraction, but again the IRS would not know about that without an audit.

The IRS only requires that the line 15a amount be at least enough to cover the RMD. Then to the extent the taxpayer shows “QCD” next to 15b and reduces 15b (by more than an 8606 would reduce it), the difference should be the QCD amount.

This gets confusing because there are 3 variables here, the amount of the QCD, the amount of the RMD, and the order done. There is a 4th variable if your IRA has basis and that basis only applies to the non QCD amount.

I don’t know whether more taxpayers making QCDs make a QCD equal or larger than their RMD vrs smaller. In your case, since you took a distribution after your QCD, that distribution will be taxable, but it could either have been the rest of your RMD if your QCD was less than the total RMD, or it could be an extra distribution you needed if the QCD covered the entire RMD, and you just needed some funds for your own use.

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