IRA check-writing and QCD’s
If one wants to make a QCD from a Vanguard TIRA account, one can request that Vanguard issue a distribution check payable to the charity. Vanguard will then send the check to the account owner for him/her to forward to the charity. If the check is issued in late Dec. 2016 but perhaps not cashed in by the charity until January 2017, presumably that QCD should be reported on one’s 2016 income tax return to correspond to the 1099-R.
Alternatively, the TIRA account owner can write a check on the IRA account payable to the charity. If this is written in Dec. 2016 but not cashed in by the charity until Jan. 2017, Vanguard would not know of that check until Jan. 2017 and would report it as a 2017 distribution.
Q. 1: In the latter case, would one report this on one’s tax return as a 2016 QCD or, more likely, as a 2017 QCD to correspond with the 1099-R?
2: What other considerations should one be aware of in deciding whether to have Vanguard prepare the check vs writing it oneself?
Thank you.
Permalink Submitted by Alan - IRA critic on Sat, 2016-04-30 19:19
I cannot think of any others, but it would be wise to avoid the IRS getting involved because the 1099R is for a later year than the actual distribution. QCDs are now permanent so they should be completed no later than mid December of any year. That also goes for any taxpayer issued distribution, not just QCDs. Depending on check presentation and processing cycles mid December might also be too late in a few cases.