Making a QCD after death of IRA owner

Submitted by Barbara Kong on Thu, 2018-03-08 22:17

Our client died last month at the age of 78. She had not taken her RMD for 2018. The calculated amount of the RMD is $112,000
Client has 3 IRAs. The beneficiaries of two of the IRAs are her two sons. The beneficiary of the third IRA is a charity.
Question: Can the client’s executor make a QCD of $100,000 taken from the third IRA (and send the QCD to the charitable beneficiary) and then make up the difference ($12,000) of the RMD by taking the distribution from the other 2 IRAs?
Thank you!



Submitted by Alan - IRA critic on Thu, 2018-03-08 23:20

This is not possible, as all distributions from an inherited IRA must be made to the beneficiary(s) of the respective IRA. The estate has no interest in any of these IRAs. A beneficiary may do a QCD, but they must be 70.5 for that and the entire distribution would still be reported to the beneficiary. While it won’t provide relief on client’s final income tax return, the year of death RMD can be taken in any proportion by the beneficiaries and since the charity will take a lump sum distribution of it’s inherited IRA, the two sons will not have to take any portion of the year of death RMD unless the balance of the charity’s IRA is under 112k.

Submitted by Barbara Kong on Mon, 2018-03-12 20:16

Hello….The client’s IRA has not been distributed yet.  My question is in regard to the client’s required distribution for 2018.  She died before the RMD took place.  My understanding is that an RMD will be required before the IRAs are distributed to the beneficiaries.  Can a QCD be made as part of the 2018 RMD?Thanks!

Submitted by Alan - IRA critic on Tue, 2018-03-13 00:52

  • No, the client’s 2018 RMD is not required to be distributed before the IRAs are retitled to the beneficiaries. The beneficiaries are responsible for completing the year of death RMD and they can do this after they each have their own separate inherited IRA retitled as such. However, since a charity is among the beneficiaries and will take a lump sum distribution of it’s share, that distribution will satisfy the year of death RMD entirely and neither of the sons will have to take a 2018 distribution. 
  • The charity is getting their share of the IRA anyway and it will completely satisfy the 2018 year of death RMD of the decedent. The sons will not have an RMD, but if they are 70.5 they can do a QCD if they want to. It would be non taxable because it’s a QCD but would have nothing to do with the RMD. The net result is that the charity would just receive their share plus the QCD from the sons share. None of this has anything to do with the estate. If the decedent’s final return for just a couple months will generate income tax, there is no way that a QCD done by the sons would reduce that tax bill, or any tax bill on Form 1041 filed by the estate.
  • I think you are attempting to reduce taxes on one of these entities through a QCD, but the sons and the charity will not be paying any taxes connected with these IRAs in 2018. And a retroactive QCD cannot be done on behalf of the decedent. A charity cannot do a QCD, per Q 37 of Notice 2007-7 a beneficiary can do one at age 70.5. Since a charity does not have an age as a non individual, the charity cannot do a QCD to itself. But I may be missing the intent of your question.

Add new comment

Log in or register to post comments