QCD’s with Multiple IRAs
QCDs with multiple IRAs.
Let’s say a client has two IRAs, Account A and Account B, but we are taking the RMD for both accounts from Account A. Account A has an RMD of 40,000 and Account B has an RMD of 20,000. The client has already taken their 40,000 RMD from account A, but we want to make 10,000 QCD from account A, counting toward the RMD for account B. Is this acceptable?
Permalink Submitted by Alan - IRA critic on Tue, 2021-09-07 23:15
Yes, this is OK. Under the IRA RMD aggregation rules, the first distributions taken from any of the IRAs counts toward the total RMD. But for a QCD to offset the taxable RMD income, it must be done from any of the accounts before the total RMD is completed. Since client still has 20,000 left of the total RMD, there is room to make a 10,000 QCD from either account. If this is done, there remains an RMD of 10,000, which can be taken from either account. When completed, there will be 60,000 distributed, but only 50,000 taxable (assuming no IRA basis). If client has IRA basis from non deductible contributions, the tax reporting is more complicated since QCDs are treated as coming entirely from the taxable portion of an RMD and are not reported on Form 8606.