IRA Transfers and Qualified Charitable Distributions: Today’s Slott Report Mailbag

Thursday, June 12, 2025

By Andy Ives, CFP®, AIF®
IRA Analyst

QUESTION:

Hello,

I have two IRA annuities with different insurance companies. One of my annuities is maturing and I would like to transfer it upon maturity to a different insurance company. Do I need to take my 2025 required minimum distribution (RMD) from the current insurance company prior to transferring the funds to a new insurance company offering a higher rate, or can I take it after the transfer?

Thanks

Mary

ANSWER:

Mary,

There are two ways to move IRA money between custodians. One is via 60-day rollover. With a 60-day rollover, the funds are paid directly to you for delivery to the other firm. RMDs cannot be rolled over. So, if you proceed with moving the money as a 60-day rollover, the RMD must be retained before the rest of the balance can be rolled over. The second (and safer) way to move money is by direct transfer. With a direct transfer, the funds are sent directly to the receiving custodian. (A check made payable to the receiving insurer that is sent to you for delivery also qualifies as a direct transfer.) With a direct transfer, you can move the entire IRA and then later withdraw the RMD from the new custodian/insurance company. However, some insurance companies apply their own internal rules when it comes to transferring IRA money, so be sure to verify with the insurance provider on how to best proceed.

QUESTION:

I am 71 years old and am picking up a part-time job. I have nothing in an IRA currently. Can I contribute to an IRA at this age?  If so, can I then do a qualified charitable distribution (QCD) from this IRA account?

Thanks!

Tim

ANSWER:

Tim,

If you have taxable earned income from this part-time job, then yes, you can contribute to an IRA. There are no age restrictions for IRA eligibility. Once the funds are in the IRA, you can then complete a QCD. However, BE CAREFUL! You cannot take a deduction for the IRA contribution and also receive the benefits of a QCD. The IRS considers this double dipping and would require you to offset (make taxable) a portion of the QCD equal to the amount deducted for the IRA contribution. A better idea might be to contribute to a Roth IRA and make a separate (non-QCD) donation to the charity.

If you have technical questions you would like to have answered, be sure to submit them to [email protected], to be answered on an upcoming Slott Report Mailbag, published every Thursday.

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