401k RMDs to Charity
My client wants to contribute to a charity directly from his 401k. He read on line IRS memo. He seems to think he must first roll the 401k RMD to his IRA and then to a Charity. This is a CASH contribution. He read that if he does this he does NOT get a charitable deduction… but reduces his income.
He is looking for clarification. Is this correct.
Permalink Submitted by Alan - IRA critic on Wed, 2017-11-29 20:16
Yes, that is correct. If he has reached 70.5 he can do a QCD from his IRA, but not from a 401k or other plan types. Because of the tax advantage of a QCD over a deductible donation itemized on Sch A, an IRA rollover is often done so a QCD can be distributed direct to the charity and the taxes on the IRA RMD can be offset by the amount of the QCD. SInce a QCD is made from pre tax funds, client could not also deduct the contribution as that would result in a double benefit. If he rolls over the 401k to an IRA, the 401k RMD will have to be distributed first, so the QCD savings will not be realized until the year following the 401k rollover.