inherited IRA account transfer/gift to a non-profit can satisfy a RMD

Submitted by Charlie Pesiridis on Tue, 2022-11-22 18:21

Hi:

A client has an inherited IRA account. There is one position in this account which is an illiquid REIT. The inherited account owner is under 50 and considering gifting the REIT position to a non-profit and questioning whether that transfer/gift to a non-profit can satisfy a RMD?



Submitted by Alan - IRA critic on Tue, 2022-11-22 19:00

  • The inherited IRA custodian might be willing to distribute the REIT in kind to the non profit. This would generate the usual 1099R in the same manner as if the distribution was made to the beneficiary. This would be applied to any beneficiary RMD due. If the non profit was an eligible charity, client could claim a charitable deduction for the value of the gift, but of course a QCD is not available for client’s under 70.5.
  • If the custodian will only distribute the position to the client, the 1099R and the RMD would be as above.
  • Either way, the custodian is responsible for determining the market value of the REIT for reporting purposes. Much of these mechanics is subject to the conditions causing the liquidity, such as receivorship issues. 

Submitted by David Mertz on Tue, 2022-11-22 20:08

Because it can’t be a QCD, it really doesn’t matter if the REIT is distributed in-kind directly to the non-profit or if it distributed in-kind to the client and then the client donates it to the charity.  Either way it would be claimed as a Schedule A deduction, if eligible.

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