QCDs over and above your RMDs
Scenario:
1. Early next year I do QCDs to equal my RMDs (Age 72 next year)
2. Right after, I start making Roth conversions over several months.
3. Later that year, I want to do more QCDs.
In #1, my IRA distributions processed as QCDs are not taxable and won’t increase my AGI. I am aware Roth conversions will be taxed. Will IRA distributions processed as QCDs in #3 be exempt from taxation as well and won’t increase my AGI?
Permalink Submitted by Alan - IRA critic on Sun, 2021-12-26 23:09
Yes, you are correct. The late QCDs will neither increase or decrease your taxable income, while the first QCDs will decrease taxable income from the RMDs. However, the late QCDs will reduce your year end balance and therefore slightly reduce 2023 and later RMDs. Remember to consider that RMDs are aggregated if you have more than one IRA, and there is a total limit for QCDs of 100k.