Qcd’s

Submitted by Maria Difalco on Wed, 2018-10-03 22:03

October 2018 issue: page 5, top of page, center column: I am assuming ‘treated as direct payment’ means that it is treated as if the custodian had sent the payment directly to the charity, rather than to the client to do so.

A friend insists he can still do qcd even though he has already taken his rmd. I would appreciate some guidelines here.

Thanks
MBD



Submitted by Alan - IRA critic on Wed, 2018-10-03 23:15

  • A direct payment is usually a check made out to the charity by the IRA custodian, however taxpayers that have check writing authority on their IRA accounts can make out their own check to the charity.  Checks issued by the custodian payable to the charity can be mailed to the IRA owner for delivery to the charity, and this is what is done in the vast majority of QCDs.
  • A QCD can be done that is less than, equal to, or more than the RMD.  Since the first distribution in an RMD is deemed to apply to the RMD, if the RMD is completed a QCD can still be done but it will not apply to the RMD and the RMD will be taxable. But if the friend finds himself in this position and still wants to donate, he will still have a tax advantage compared to making a non QCD donation. However, that tax advantage will be far less than if he had done the QCD earlier so that it would be part of the RMD distribution.

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