Traditional IRA conversion from tax-deferred plans to enable QCD
So grateful for this resource!
After reviewing some similar threads,
a. It is my understanding that an RMD cannot be QCD from 457/401k/403b funds.
b. I need to convert 457/401k funds to a Traditional IRA in order to take advantage of the QCD option with the required distributions (RMD).
c. The 2016 RMD would be taxable regardless of whether or not the IRA conversion is made this year.
d. The conversion would provide a QCD option for RMD starting in 2017.
(Please verify.)
Remaining questions, if the above information is true:
1. Would the 2016 RMD have to be made prior to the conversion?
2. Would more than one IRA be required? Can funds from a 457 and 401k be converted into the same Traditional IRA or would two separate IRAs be required?
3. After the 2016 RMD and the IRA conversions have been made, could a QCD (non-RMD) be made from the new IRAs during the remainder of the year?
4. What am I missing?
Thank you!
Permalink Submitted by Ron Smith on Tue, 2016-04-26 11:46
Comment deleted
Permalink Submitted by Alan - IRA critic on Tue, 2016-04-26 17:30
You are correct that you need an IRA account to fund a QCD, but what you refer to as a conversion is actually a direct rollover to the IRA. a,b,c, and d are all correct. Your 2016 RMD from the employer plans must be completed before they can be rolled over to an IRA. You can do all the direct rollovers into a single rollover IRA account. Finally, you can do a QCD in 2016 from the IRA as long as you have reached 70.5. It would just not apply to any RMD amount. A QCD can be less, equal, or more than the RMD. Generally, your QCD should be the first IRA distribution of the year since the first distribution is deemed to apply to your RMD.
Permalink Submitted by Ron Smith on Thu, 2016-04-28 10:49
Perfect!Thank you, Alan!