401 k contributions to DONOR ADVISED FUND
Can a client move $1mm from 401 k account (after retired) to a donor advised fund?
fully deductible?
Is this not considered a MEGA QCD?
Can a client move $1mm from 401 k account (after retired) to a donor advised fund?
fully deductible?
Is this not considered a MEGA QCD?
Permalink Submitted by Alan - IRA critic on Thu, 2021-09-09 18:11
Edited to disqualify DAFs from the waiver of the 60% limit.
It is not a QCD since a QCD must come from an IRA, is not included in AGI, and is limited to 100k. Client could take this 401k distribution, which would be included in AGI, but offset the taxable income by donating the full amount, but NOT to a DAF. Normally, cash donations are limited to 60% of AGI, but the CARES Act waives that limit for 2021. AGI based limits could be breached by this large distribution, therefore some additional taxes could be triggered. For example, ability to itemize medical expenses starts after a 7.5% AGI floor, and that floor would be increased by 75,000 by a 1mm distribution.