QCD – IRA Deductible Contributions
Client has turned age 70.5 this year 2024.
Client is still working and has made in prior years and plans to for 2024 and 2025 IRA deductible contributions.
They would also like to make QCD’s now that they are past age 70.5.
What are the offset ramifications for the limitations? Is it for the deductions or amount of RMD they can make while doing both?
Thanks
Matt
Permalink Submitted by Alan - IRA critic on Mon, 2024-03-04 18:48
The Secure Act anti abuse provision with respect to deductible IRA contributions made for the year they turn 70.5 or later results in QCDs being reduced by the amount of such deductible contributions. Starting in the year client reaches 73, the QCD reduction will result in more of the RMD being taxable. Accordingly, client may be better off making Roth IRA contributions unless their marginal tax rate in higher now than it will be when RMDs begin. Another option to consider if married is for one spouse to make the deductible contributions and the other spouse to make the QCDs and Roth or spousal Roth IRA contributions.