Qualified Charitable Distributions

Submitted by Kal Goren on Mon, 2019-08-12 21:46

Is there an ordering rule for QCDs that are part of an RMD i.e. do the first distributions have to be QCDs or is it just that the recipient is a qualifying charity?
Also, can investment advisory fees be paid from the IRA? are they part of the RMD and taxable to the beneficiary (owner of the IRA?)
thank you



Submitted by Alan - IRA critic on Tue, 2019-08-13 00:19

  • Investment advisory fees can be billed directly to the IRA and paid therefrom without being a taxable distribution. Since the misc deduction subject to 2% AGI is suspended until 2026, this is the way to go at least for pre tax retirement plans. For Roth IRAs on the other hand, better to pay those fees from outside dollars and no deplete the Roth balance.
  • Since the first distributions in an RMD year are applied to the RMD, you want to avoid having any QCDs that are not used to offset RMDs unless total QCDs will exceed the RMD total. Most QCDs are less than the RMD however, and in that case the QCD does not have to be first. For example, if the RMD is 10k and the QCD is 5k, you could do the 5k QCD and the 5k RMD in any order and just be taxed on 5k. However, since this can be somewhat confusing, it is safer to simply do the QCD first to be sure all of it offsets RMD amounts up to the amount of the QCD. 

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