Spousal IRA – QCD Eligible

Submitted by Teresa Miller on Sun, 2018-03-25 17:32

My father (age 79) was the sole beneficiary of my mother’s IRA. Mom was 80 when she passed in February 2017. Dad took IRA as his own in a new/separate account (did not move it into his existing IRA) . RMD was taken in 2017 after mom’s DOD.

Question: can Dad make full distribution of this IRA as a QCD? Balance <$100k. Dad has another IRA and is taking RMDs out of that as a QCD (also less than $100k). The total of QCDs will be less than $100k. Other questions for my own knowledge: (1) Can an RMD be taken after DOD as a QCD BEFORE moving into an account titled in a spouse's name? (2) If yes, does the QCD appear on the final joint income tax return or the estate tax return? If no, can it count as a QCD for the joint return if dad moves it into his name? This is really water under the bridge as Dad took it as taxable income and then made a charitable donation in that same amount because we didn't have clear counsel. (3) Will the QCDs impact the Medicare premium (Part B) that dad pays? I think the AGI runs at least one year behind (e.g. 2016 income is used for 2018 premium bc 2016 taxes were paid in 2017 and that's the income that CMS has to calculate 2018 Medicare premiums). If possible, please cite tax code reference.

Thank you so much for your help.



Submitted by Alan - IRA critic on Sun, 2018-03-25 19:14

  • Yes, he is allowed to take QCD distributions from both the inherited IRA and his own IRA as long as the total QCDs do not exceed 100k per year.
  • Q 1 – Yes, a QCD can be withdrawn from the beneficiary IRA. However, Dad should elect to assume ownership of the inherited IRA ASAP as that will reduce his RMD (Uniform Table will then apply) for 2018 and beyond. It will also allow HIS beneficiary a lifetime stretch upon his death rather than HIS beneficiary being considered a successor beneficiary.
  • Q 2 – All distributions are reported by the recipient of those distributions, including QCDs. The estate has no interest in the IRA unless the estate was the actual or default beneficiary. Dad will report all distributions he takes from his own IRA or the inherited IRA and all QCDs distributed by either (max 100k). I am assuming therer were no QCDs in 2017, just Mom’s uncompleted RMD for 2017. The last joint return would be for 2017. Dad files single (unless remarried) for 2018. I think you are saying that Dad took a non QCD RMD distribution in 2017 and then donated the money, so not a QCD but he might be able to itemize the donation on 2017 final joint return.
  • Q 3 – A QCD is not included in AGI, and therefore will not affect Medicare Premiums (IRMAA surcharge). This is another reason to use QCDs for donations whenever possible. You are correct about the 2 year offset. The 2017 joint tax return will determine his Medicare premium in 2019, and 2018 single tax return will affect his 2020 Medicare premium. I assume there is an adjustment made for a filing status change, as the joint income on 2017 return should be reduced as he will be single in 2019.

Submitted by Teresa Miller on Sun, 2018-03-25 19:22

Thank you SO much.  I thought the QCD was permissible; it seems that this distribution type is not overly common and people were looking at me like i had two heads and three eyes.  Very much appreciate your reply!

Submitted by tomd37 on Sun, 2018-03-25 20:14

Now that the 2018 standard deduction amount has increased significantly and an additional exemption amount of $1,300 (for 2018 at least) is available to the taxpayer and spouse (if any) over age 65 I think more people will be taking the standard deduction as opposed to itemizing.  As such the value of QCDs become more valuable to people over the age of 70.5.  Taxable income is reduced by the amount of the QCD.  I also recognize that personal and dependent deductions are going away, but it think in general terms most older folks will benefit.  Tom D.

Add new comment

Log in or register to post comments