MRD too high. Includes the Qualified Charitable Contribution
Individual received their 2016 MRD. The amount was higher than the taxpayer wanted. The taxpayer wanted to elect a certain amount of the 2016 MRD as a qualifying charitable deduction. Can the taxpayer roll back the amount received into her IRA and then receive by separate check for the new reduced MRD, and then continue with her qualified charitable contribution.
She is over 72.
Permalink Submitted by Alan - IRA critic on Wed, 2016-01-06 17:33
No, the individual cannot roll back any part of an RMD. There is no reduced RMD. The RMD amount is a set figure, and the first distributions of the year are automatically deemed to apply to the RMD and are not eligible for rollover. It sounds like the individual already distributed more than the RMD, and none of it was a QCD. Let’s say the RMD is 15k and individual received 20k. Only 5k can be rolled back but that will use up the one rollover allowed for all IRAs and individual needs to be sure 12 months has passed since the last distribution that was rolled over. If the rollover is permitted, the individual can then do a QCD for that 5k and the 5k will not be included in their AGI. However, the RMD was completed earlier and the QCD cannot apply to the RMD, therefore the full amount of the RMD will be taxable, but not the additional 5k. In summary, if a QCD is to be applied to an RMD, it must be done before the RMD has been completed. That usually means the QCD should be done as part of the first distribution of the year.