Permalink Submitted by David Mertz on Thu, 2018-08-30 15:37
As you indicated, these distributions satisfy $2,500 of the client’s $17,685 RMD (leaving $15,185 of the RMD to satisfy with additional distributions). However, they do *not* qualify as QCDs because the client was under age 70½ at the time of the distributions. They’ll need to be reported on the client’s tax return as taxable IRA distributions and as charitable deductions on Schedule A, not as QCDs. If the client’s total itemized deductions are less than the standard deduction, the client won’t get any tax benefit from these contributions.
Permalink Submitted by David Mertz on Thu, 2018-08-30 17:13
I don’t see how there can be any fix for this. I don’t see any prospect for the client to get the original gift back from the charity to undo the original contribution, turning it into a distribution paid to the client instead. Giving back contributions could create legal issues for the charity.
Permalink Submitted by tomd37 on Thu, 2018-08-30 18:22
Unfortunately a mistake has been made that cannot be corrected. It is important for the individual and also anyone providing guidance to that individual to understand the rules and regulations prior to taking steps like this. If unsure ask first before taking action. Tom D.
Permalink Submitted by Wendy Mommaerts on Thu, 2018-08-30 14:13
Clients 2018 RMD is $17,685 and the two QCD’s he requested in June was total of $2500. Still need to satify the remaining RMD amount
Permalink Submitted by David Mertz on Thu, 2018-08-30 15:37
As you indicated, these distributions satisfy $2,500 of the client’s $17,685 RMD (leaving $15,185 of the RMD to satisfy with additional distributions). However, they do *not* qualify as QCDs because the client was under age 70½ at the time of the distributions. They’ll need to be reported on the client’s tax return as taxable IRA distributions and as charitable deductions on Schedule A, not as QCDs. If the client’s total itemized deductions are less than the standard deduction, the client won’t get any tax benefit from these contributions.
Permalink Submitted by Wendy Mommaerts on Thu, 2018-08-30 16:26
Is there any kind of fix for this?
Permalink Submitted by David Mertz on Thu, 2018-08-30 17:13
I don’t see how there can be any fix for this. I don’t see any prospect for the client to get the original gift back from the charity to undo the original contribution, turning it into a distribution paid to the client instead. Giving back contributions could create legal issues for the charity.
Permalink Submitted by tomd37 on Thu, 2018-08-30 18:22
Unfortunately a mistake has been made that cannot be corrected. It is important for the individual and also anyone providing guidance to that individual to understand the rules and regulations prior to taking steps like this. If unsure ask first before taking action. Tom D.