QCD and RMD order of withdrawals

Submitted by Robert Wright on Mon, 2021-01-11 15:00

I’m 73 in 2021.

My 2021 RMD = $10,000.

Please confirm that if I take the following withdrawals in the order specified, my 2021 RMD of $10,000 will be satisfied.

Jan 15, 2021 $2,000.00 withdrawal to my personal checking account from my TIRA

Jan 30, 2021 $3,000.00 QCD to my favorite charity from my TIRA.
The distribution check was payable to the charity and mailed to my house.
I delivered the $3,000 check to the charity in person and received a receipt from the charity.

Feb 15, 2021 $5,000.00 withdrawal to my personal checking account from my TIRA.

Thank you in advance for your help.



Submitted by David Mertz on Mon, 2021-01-11 15:21

The order doesn’t matter.  The total of $10,000 of distributions from this TIRA in 2021 satisfies the $10,000 RMD required for this TIRA for 2021.

Submitted by tomd37 on Mon, 2021-01-11 17:16

What would be the situation if the OP had done the entire $10K RMD in Janaury and then decided in a later month he wanted to do a $3K QCD.  Would that $3K be taxable income?

Submitted by Robert Wright on Mon, 2021-01-11 17:37

tomd37, the $3K  QCD withdrawn in a later month would not be taxable. In your case, the account owner would have a $10k taxable distribution (the January distribution) which satisfied the 2021 RMD and a $3k tax-free QCD; for a total of $13,000 in distributions for the year.

Submitted by David Mertz on Mon, 2021-01-11 17:51

In that case, none of the first $10,000 would be QCD since it was not paid directly to a charity and the $3,000 QCD would have to be an additional distribution.  Of the total of $13,000 distributed, $3,000 would be a nontaxable QCD and, assuming no basis in nondeductible traditional IRA contributions, $10,000 would be taxable.  No amount would be eligible for rollover.
QCDs are always nontaxable because they are excludible from income.
If in this case the individual instead wanted to make part of the initial $10,000 distribution be a charitable contribution, it would not meet the requirements to be a QCD and it would have to be claimed as a regular charitable contribution, either on Schedule A as an itemized deduction or, if not itemizing, only $300 of it directly on Form 1040.  If claimed on Schedule A, none of the $3,000 would be excluded from AGI but the charitable contribution but taxable income would be reduced by $3,000 (but not below zero).

Submitted by Alan - IRA critic on Mon, 2021-01-11 20:02

Bottom line is that for the OPs fact pattern, the order does not matter. But for Tom’s example, it does matter because there would be 10k of taxable income, but if the 3k QCD was completed before 10k was distributed in total, taxable income would only be 7k as in OP’s example.
However, if Tom needed the entire RMD of 10k for his own spending needs that year, then he would have at least 10k of taxable income to report with or without the QCD. Example: 3k QCD distributed first, then 7k for remainder of RMD. But later in the year he needs an additional 3k to meet his needs, so would need to take another distribution of 3k to bring the taxable amount up to 10k. 
 

Submitted by William Richmond on Mon, 2022-07-18 16:59

Example: RMD for year is $100k. Taxpayer makes QCD on 1/5/22 of $10k and takes RMD of $90k in 5/22. Taxpayer now wishes to make another QCD of $15k. Will that QCD of $15k be a taxable distribution?

Submitted by Alan - IRA critic on Mon, 2022-07-18 17:41

Submitted by Alan - IRA critic on Mon, 2022-07-18 17:41

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