RMD to Charity
Hello. A client wants to donate her RMD for 2016 to her church. How does that work, logistically to avoid paying taxes on it? Thanks..
Hello. A client wants to donate her RMD for 2016 to her church. How does that work, logistically to avoid paying taxes on it? Thanks..
Permalink Submitted by Alan - IRA critic on Thu, 2016-03-17 19:33
She requests that the custodian make out the check in the amount of the RMD directly to the church and mail it to her for delivery to the church. This must be the first distribution she takes from the IRA this year. Her 1099R will look no different than usual, but the QCD gets reported on line 15 of Form 1040 similar to a rollover, except that “QCD” goes on the line next to line 15b. 15b will not show any taxable amount for the QCD. Her RMD is satisfied and the IRA distribution is not included in her AGI. Of course, she cannot take an itemized deduction for the QCD. Finally, she should ask for a receipt from the church in the usual manner and retain it.
Permalink Submitted by Julie Brangenberg on Fri, 2016-03-18 15:04
The custodian requires the check be mailed directly to the charity, and will include the client’s personal information (contract #) on the check. Is there any other way to dontate the distribution to the charity in order to avoid showing the charity the clients personal info.?
Permalink Submitted by Alan - IRA critic on Fri, 2016-03-18 17:10
The check must be issued by the custodian, and this custodian apparently issues a QCD check with the same data as a distribution paid to the IRA owner. Only option appears to be if the custodian would agree to mail the check to the IRA owner, the owner could eradicate the account info on the check. From a practical standpoint however, knowing the account number would not enable anyone to tap into the account given the security screens that most of these custodians now use.