QCD on IRA RMD’s and Roth Conversion
If Congress extends the QCD on IRA RMDs (up to $100K) for 2010, is the RMD (if donated to charity) reported as income? I’m asking because if not, that means essentially my client could convert even more this year. Here’s an example:
IRA RMD to charity = $30,000
If not reported as income, client has reduced income by $30,000. This allows $30,000 more for conversion purposes than they otherwise would.
Thanks for your help,
Doug
Permalink Submitted by mk foss on Tue, 2010-05-04 20:48
Before an individual can do a Roth Conversion this year, they must take their RMD. A gift to charity directly from the IRA would be considered their RMD. If the QCD legislation passes, that RMD would not be added to income. If it does not pass, it will be included. It’s possible to do the charitable contribution now and convert assuming that the QCD will be added to income and then convert more later if the legislation passes.