First RMDs from different Retirement Plans and timing of QCDs
1. If one has to start taking RMDs in 2022, can RMDs from different 403(b)s be taken that year, while the RMD for the traditional IRA postponed till April 1st of 2023 (aware that there will be 2 RMDs from that IRA that following year)?
2. If #1 is possible, the 2022 RMD for the traditional IRA which can be postponed to the following April 1, 2023, will be based on the IRA balance on December 31, 2021, while the 2023 RMD to be taken by December 31, 2023, will be based on the IRA balance on December 31, 2022. Is my thinking correct?
3. If #2 is executed, is a QCD made in 2022 able to decrease AGI for 2022 or does that QCD need to be postponed till 2023 (before that first RMD is taken out by April 1) and will only decrease AGI for 2023?
Permalink Submitted by Alan - IRA critic on Sat, 2021-08-28 23:48
Yes, this can be done.
Your assumptions are correct.
AGI for 2022 cannot be decreased by a QCD, because a QCD triggers an IRA distribution of the same amount. There would be no net change in AGI or taxable income if the IRA distribution in 2022 is offset as a QCD. However, the remaining RMD in 2023 would be reduced by the 2022 distribution. 2023 taxable income is reduced by reducing the total RMD in the 2022 QCD scenario, and if the QCD is moved to 2023 instead, the taxable RMD in 2023 is similarly reduced by the QCD. The 2022 QCD might have a slight edge since the 2022 distribution will reduce the 2022 year end balance and will reduce the 2023 RMD by around 3.7% in addition to reducing the 2023 RMD by the amount of the 2022 distribution. Of course, other income and deduction factors may differ in these two years, and could trump the QCD timing question.