Sequence of IRA distribution when donating to charity

Submitted by alberto vega on Mon, 2019-11-04 21:38

Received conflicting information on the timing of RMD distributions to charity and to owner of IRA

Client age 72 in 2019 already sent $ 2,000 by trustee of IRA to a church. The total RMD in 2019 is $ 10,000.
He is not sure if he will give $ 1,000 or $2,000 to the church by December 2019 but he wants to take now at least
$6,000 distribution for his own use.

1. Does he have to do all the distributions to the church to get it excluded from his gross income, before he takes any amount of the IRA RMD for his own use.

2. Is the bank going to report all $ 10,000 in the 1099R or will the bank only report only the amounts he took for his own use which could be $ 7,000 or $ 6,000 depending on his December amount to the church.



Submitted by Alan - IRA critic on Mon, 2019-11-04 23:13

  • No, he can take an RMD distribution to himself for 6000 now. That will bring his completed RMD to 8000 (6000 for him and 2000 as QCD). That still leaves up to 2000 open for an additional QCD to complete his RMD.
  • Now if he instead needed 8000 now, that would complete his RMD, but an additional QCD would not offset any more of his RMD. In that case, he would be taxed on 8000. A QCD can be less than, equal to, or more than the RMD, but all distributions are first credited to the RMD. In order to avoid confusion it is simpler to just complete all the QCDs first.
  • There is no special 1099R reporting for QCDs. The IRA custodian will add all distributions including QCDs together and report the total on the 1099R.  It is up to the client to subtract the QCDs from taxable income. This is done similar to reporting a rollover where the total distributions go on line 4a and just the taxable amount on 4b with “QCD” entered on the line next to 4b.

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