QCD In final year to start RMD’s
Client with a traditional IRA Turned 701/2 Dec of 2018
If he delays starting RMD’s to 2019 and takes 2 years of RMD in 2019
Can he use the 2 years of RMD for QCD in 2019?
Or do you have to do it on a one year at a time basis?
2018 in 2018 and so forth
Permalink Submitted by Alan - IRA critic on Tue, 2018-12-18 16:11
Client could defer the 2018 RMD to 2019, meaning that no distribution would be reported in tax year 2018 providing client did not take a distribution earlier this year. Prior to 4/1/2019 client would need to complete the 2018 RMD regardless of whether a QCD is part of that. Depending on the total amount of QCDs planned client could do a QCD distribution as part of the 2018 RMD or if the QCD total is small enough client could wait and make the total QCD donation at one time to offset part of the 2019 RMD. All of this activity would be reported on the 2019 return, none of it on the 2018 return. Since QCDs can be less than, equal to, or more than the annual RMD client should determine now how this option would affect his 2018 and 2019 tax bills in total. Another thing to consider if client turns 70.5 late this month is that there might not be enough time to do a QCD in 2018 anyway. Always keep in mind that if any year’s RMD is completed before doing a QCD, then the QCD will not offset the RMD taxable income since the first distribution in a calendar year is always applied to the RMD for that year.
Permalink Submitted by tomd37 on Tue, 2018-12-18 17:17
Great explanation Alan re QCDs as part of the RMD and the sequencing and taxability. I know you have posted here and other similar sites about this, but this is a great explanation for QCD participants. Tom D.