Can QCDs by made after RMDs have been taken?
Sarah Brenner’s #4 in her 11/30/16 article seems to indicate the answer is “yes.” “A QCD can exceed your RMD amount for the year as long as it does not exceed the $100,000 annual limit.”
However, a published article from a guy who seems to be credible says this (specifically, the last sentence in the example):
“One important caveat of using a QCD to satisfy an RMD obligation, though, is that an RMD is presumed to be satisfied by the first distribution that comes out of the IRA for the year. And because IRC Section 408(d)(3)(E) does not permit an RMD to be rolled over back into an(other) IRA, once an RMD occurs, it is irrevocably distributed (and taxable).
Example 2. Chuck had a $7,400 RMD obligation for the current 2016 tax year. In February, he took a $7,400 to satisfy his entire RMD. In March, Chuck realizes that it may have been better for him to do a QCD instead, as he was planning to contribute to charity later in the year anyway. However, even if Chuck now does a QCD, it cannot be applied towards his RMD (which was already satisfied), nor can he undo his prior RMD (which is irrevocable once distributed). At best, Chuck can simply take the $7,400 distribution he took from his IRA, donate it to a charity, and claim a $7,400 charitable deduction as an itemized deduction on Schedule A, and hope that it at least mostly offsets his prior taxable distribution.”
So, what is the right answer?
Permalink Submitted by Alan - IRA critic on Mon, 2018-12-03 22:56
They are both right. A QCD can be less than, equal to, or more than the RMD subject to the 100k limit. However, if the RMD is completely satisfied before the QCD is done, the QCD will not offset any of the taxable RMD, but the QCD itself will still be non taxable. The problem with the solution to Example 2 is that under the new tax law, less than 10% of seniors will be able to itemize. Therefore timing is critical to getting the most benefit from a QCD. To play it safe, the first distribution should be the QCD, then any remaining portion of the RMD should be withdrawn.