QCDs and 60-Day Rollovers: Today’s Slott Report Mailbag

Thursday, January 12, 2023

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on Twitter: @theslottreport

Question:

I am confused regarding the requirements for making a qualified charitable distribution. Is it necessary for the donation to be sent directly from the financial company to the charity, or can the check be made out to the charity but sent to me and then sent to the charity?

Thank you,

John

Answer:

Hi John,

We get a lot of questions about the mechanics of doing a qualified charitable distribution (QCD) correctly. The rules require a direct transfer from your IRA to the charity. Either of the methods you describe would satisfy this requirement. What would not work would be having the check be made payable to you and then your giving the funds to the charity.

Question:

Hi Ed,

Very much appreciate all you and your team do. My question is as follows:

Client aged 78, took full $25,000 RMD in November 2022 from his IRA. The custodian mistakenly sent him an extra $10,000 on the last day of the year from the same IRA. Can we do a 60-day rollover and roll the $10,000 back into the IRA before we take the RMD in 2023? Or, will he need to first take this year’s RMD before he can roll it back into the IRA? Or, does neither option work? 

Thanks

Answer:

Your client does have the opportunity to do a 60-day rollover. The $10,000 is not part of the 2022 RMD so it would be rollover eligible as long as all the other requirements for a rollover are met, such as the 60-day deadline and no other rollovers within the last 356 days.

The rollover can be done before the RMD for 2023 is taken. The first money out of an IRA during the year is considered an RMD (the “first-money-out” rule.) The $10,000 would be a rollover deposit and not a distribution, so that rule would not apply in your situation. There have not been any distributions in 2023 yet. Just be sure to add the $10,000 that was outstanding at year end to the balance used to calculate the 2023 RMD.
 

Post Views: 92
Posted in: , , , , , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.