SIMPLE IRA QCDs when person still employed
Person is turning 73 July 24, 2025. She has a SIMPLE IRA worth around $300,000 that her employer is adding about $120 per month into. She is still working at her employer. For 2025 she has an RMD requirement of around $11,208, since she is turning 73 this year. She would like to do about $8000 in QCDs and the remainder ($3,208 or so) as a taxable RMD into her bank account. Can she do this since she is still employed and adding money? Or do we need to rollover some of the account into a Rollover IRA and do the QCDs from there? What are her options?
Permalink Submitted by Alan - IRA critic on Tue, 2025-06-03 18:44
A QCD cannot be done from an “on going” SIMPLE or SEP IRA. Assuming that she had participated in the SIMPLE for at least 2 years, she should have done a TIRA rollover last year and could then have done the QCD this year from the TIRA.
As it stands, she must first complete the SIMPLE IRA RMD this year, then do a rollover to a TIRA at least equal to the intended QCD amount. She can then make a QCD next year from the IRA which will offset some of her RMD income.
While she does not have to complete the SIMPLE IRA RMD for 2025 until 4/1/2026, if she defers the 2025 RMD until then, she will not be able to do the 2025 rollover to the IRA. So if she wants to be able to do the QCD next year, she cannot defer the 2025 RMD until 2026. She needs to complete it and then do the IRA rollover this year.
Good strategy, but she got started a year too late. She could still do a QCD this year but only after completing the RMD and rollover, and the QCD would not reduce her RMD income for 2025.