QCD’s

Submitted by Robert Roselli on Wed, 2019-09-25 14:00

If someone has an RMD of $ 100,000, and let’s say they’ve already taken their $ 100,000 out YTD. Now they want to take out an additional $ 20,000 and have it paid directly to a charity, can they do a QCD? Or is it going to be taxable and they get a deduction?



Submitted by Alan - IRA critic on Wed, 2019-09-25 15:15

They can still do a QCD and the 20,000 will be non taxable. However, it will not offset the tax due on the 100,000 RMD already completed. Therefore, taxable income will be 100,000. However, if they had done the QCD at a time when only 80,000 or less of the RMD had been distributed the QCD would be part of the RMD. The taxable income for that distribution pattern would only be 80,000. Either way, they still report a QCD next to line 4b of Form 1040 to eliminate tax on the 20000 QCD. 

Submitted by Robert Roselli on Wed, 2019-09-25 16:36

I think I read it should be done by 12/31/19 if you want to do it for 2019. can you put it in up to tax deadline of April 15th similar to an IRA or is it a hard cutoff 12/31?

Submitted by Alan - IRA critic on Wed, 2019-09-25 17:11

  • The cutoff is 12/31 for a QCD to be reported on that year’s return. This corresponds to the 1099R annual cycle. However, a QCD is subject to the same acknowledgement requirements as a deductible charitable donation, which means that the charity must also have received the QCD check by 12/31.
  • Because some people make multiple QCD donations, check writing authority for the IRA is becoming commonplace, particularly with the larger IRA custodians. When the IRA owner writes their own QCD check, the custodian will not know until the check is negotiated. Some charities are slow to act, therefore someone with check writing should complete all their QCDs by Thanksgiving to be sure the charity has time to cash the check. If not, the 1099R will not include that QCD, and may also be short of the RMD, forcing the IRA owner to file Form 5329 to request a penalty waiver.

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