QCD and RMD Timing in Calendar Year
I began taking my RMDs in 2019 (when I turned 70 ½). Because I am “charitably inclined,” I have been making some of my yearly charitable contributions as QCDs from my IRA. This also has some tax advantages to me.
I have been taking out the portion of the RMD that is not earmarked as a QCD in January and then making QCDs from the IRA in early fall of the same calendar year. Fall is when I am willing to make a decision about the charitable organizations to which I wish to make contributions and before the December “crunch” of interacting with custodians about issuing checks and charities about documenting contributions. I thought I was doing all of this as required by the IRS (check to charity directly from IRA; nothing taken in return for donation; no donor-advised funds).
Today I read this post at a reputable financial advisory website:
“You can use a QCD to satisfy your RMD for the year as long as the QCD is made before the RMD comes out.”
This seems to imply that I would need to make QCD’s early in the year and take the remaining RMD later in the year.
Is the above statement about timing of the QCD in relation to the RMD correct?
Permalink Submitted by Alan - IRA critic on Tue, 2021-09-14 23:24
The above statement is not correct, but rather is designed to prevent taxpayers from completing their RMDs entirely before doing QCDs, in which case the QCD not reduce the taxation of the RMD.
But you are limiting your first distribution to the amount of your RMD that will not be used for QCD, leaving the rest of your RMD for later QCDs. That will still accomplish your goal of only being taxed on the portion of your total RMD that is not done as QCDs.
The statement would have been accurate if it had stated to complete all your QCDs before completing your RMD, and you have done that.