Aggregating IRAs and QCDs

Submitted by troy sharpe on Wed, 2021-02-10 23:35

Client has an independent 401k and is 73 years old. We are taking her RMD this year from that account then rolling it into a new IRA. She also has an IRA fixed annuity that has an RMD due of about 15,000. She wants to take the RMD from the investment account (new IRA created from rolling over the independent 401k) and let the safe annuity grow. My question is can she do a QCD of about 15,000 from the new IRA about to be created to account for the RMD due from the existing IRA fixed annuity.



Submitted by troy sharpe on Wed, 2021-02-10 23:41

To clarify: 80,000 401k rolling over IRA this year after we take RMD due from 401k.  Existing Fixed Annuity IRA with RMD due of 15,000.  Client wants to do a QCD, but not from Annuity, and instead from the 80k soon to be IRA.   Can a QCD be made from a separate account than the one that owes the RMD?  In this case the QCD would come from the newly formed 80,000 IRA instead of the IRA fixed annuity which owes the RMD. 

Submitted by Alan - IRA critic on Thu, 2021-02-11 00:00

Yes, that can be done under the IRA RMD aggregation rules. This would reduce the taxable amount of the IRA RMD to the extent of the QCD up to 15k. As usual, the QCD should be completed before the RMD amount is completed.
Note that some IRA annuities with alot of fringe benefits attached in addition to the death benefit must include the calculated value of certain fringe benefits in the year end value. This is complex and the insurance company must do the calculations and advise the IRA annuity owner of the RMD amount for the annuity. This does not change what you asked about, but could affect the 15k RMD figure if that was calculated using just the cash value of the annuity.

Submitted by troy sharpe on Thu, 2021-02-11 20:02

Appreciate it! 

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