QCDs and RMDs: Today’s Q&A Mailbag

Thursday, April 26, 2018
By Jim Glass, JD
IRA Analyst
Follow Us on Twitter: @theslottreport
 

Question:

Can you please advise regarding the following:

I’m 63 years old and am required to take a yearly RMD [required minimum distribution] from my deceased Mom’s IRA (BDA).  In order to save on taxes, am I allowed to have my financial institution send the RMD directly to a charity even though I’m not 70 ½ yet ?

Also, when I’m retired and not able to itemize, is there any way to give charitable contributions to save on taxes if standard deduction is $12,000?

Thanks in advance!!!! 

Pat                                 

 

Answer:

Hello Pat,

When you reach age 70½, you’ll become eligible to make a qualified charitable distribution (QCD) from your IRA. Although not deductible, a QCD is not included in your income.  

A QCD must be paid directly from the IRA to charity, may be as large as $100,000, and can be used to satisfy RMD requirements.

At this point in time, there is no way to predict what the income tax rules might be regarding deductions and charitable contributions when you retire several years in the future.           

 

Question:

Hi-

I have been researching and see that you can have a charitable contribution replace your IRA RMD but cannot find the same regulation regarding a 403(b) RMD.

Is there any initiative to have all the retirement plans treated the same as the IRA in regards to the charitable contribution?

Thanks.

Dave

 

Answer:

Hello Dave,

When you describe a charitable contribution as replacing an RMD, we assume you are talking about qualified charitable distributions (QCDs).

QCDs cannot be made from a 403(b) plan under current law, and possible future law changes are speculative.

However, the tax law does allow funds to be rolled over from a 403(b) plan to a traditional IRA.  To the extent you move funds into an IRA, you become able to use QCDs and meet RMD requirements with them.  

Note that while the law allows rollovers from 403(b) plans to IRAs the terms of your particular 403(b) plan may place restrictions on such rollovers. Consult with your plan’s administrator about details.

 

Receive Ed Slott and Company Articles Straight to Your Inbox!

Enter your email address:

Delivered by FeedBurner

 

Post Views: 14
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.