QCD/RMD

ALAN: a change since my last note. My Lifetime Income benefit is large enough that my total RMD is covered (required by 2 policies). Originally I had planned to use both policies for QCD (1 with 4 and 1 with 3 requests). Do the QCD’s from the 2nd policy also have to have the date of issue stated BEFORE my RMD check from the 2nd policy is processed? If so, then I do not think using QCD from both policies will work.

I am wondering if it would be best to take a seperate RMD from each policy, using only the LIB policy for all QCD’s. The total monies will be the same and the LIB policy will still cover both QCD’s and RMD for the one policy.

Thanks, M

brndflc



Things get pretty complex in this situation. Are both polices subject to LIB or only one? Are there any other IRA accounts or just two? Are your total intended QCD amounts less or greater than your RMD? You still must complete all QCDs first if you want all QCDs to be credited against your RMD and the math for that might require you to do QCDs from both contracts.

Alan/thanks-  Only 2 IRA accounts; only one with LIB.   Let me throw in another monkey wrench .  Hypothetically  —  only one policy  — LIB is for $10,000.00;  QCD’s total $7000.00; RMD, for only this policy, is $6000.00.  After QCD’s allocated there is a balance of $3000.00 to be sent to me.   Do I need to request an additional $3000.000 to make up the difference for the RMD since QCD’s are greater than RMD?  Or are all bases covered  because initial amount of LIB covers both RMD and QCD’s?2nd policy RMD is $1800.00; Qcd is $1000.00.  Same question–do I need to request more funds to cover?  Since these are now two seperate transactions, then RMD should be satisfied for both and QCD’s will be credited against my RMD per individual policy.Thanks, Mbrndflc 

OK, RMDs which can be aggregated total 7,800. You have no choice but to take out the 10,000 for the LIB policy, so that will more than cover your RMD and QCDs. QCDs total 8,000 and must be done first. Most simple approach is to first complete the 8,000 of QCDs from the LIB policy. Your total aggregated RMD is also satisfied as soon as 7,800 of QCDs are completed. Then take out the remaining 2,000 to meet the LIB requirement and must be done before year end. The second policy can be ignored for these purposes because both your RMD and QCDs have come from the LIB policy. The taxable income on line 15b of Form 1040 will total 2,000, somewhat less if you have any basis in your IRA.

Thanks–you always help to clarify my confusion.Mbrndflc

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