Already Made a QCD?

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Topic Author
jimcrawford01
Posts: 87
Joined: Mon May 19, 2008 5:23 pm

Already Made a QCD?

Post by jimcrawford01 »

I made a QCD. Checks cashed by the Charity. Then the CARES bill became law.
Can I simply take an IRA w/d in the amount (or greater) of the QCD in order to protect the tax benefit of the QCD, as intended?

Thanks.
Jim
sport
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Re: Already Made a QCD?

Post by sport »

jimcrawford01 wrote: Mon Mar 30, 2020 12:32 pm I made a QCD. Checks cashed by the Charity. Then the CARES bill became law.
Can I simply take an IRA w/d in the amount (or greater) of the QCD in order to protect the tax benefit of the QCD, as intended?

Thanks.
Jim
No. The QCD is now just a tax-free distribution. If you take another distribution, it will be taxable income.
btenny
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Re: Already Made a QCD?

Post by btenny »

I think this is how it will work. This is how I am doing it. I also have already done some QCDs and plan to do more later this year.

You will get a W2 from your IRA administrator for any IRA withdrawals. You will report that as income on your 1040. But then you will also report your QCDs for the same amount on your 1040 as well. So your net taxable income due to IRA will be zero.

Hope this helps. I am not a tax accountant or lawyer so others may offer different opinions...

Good Luck.
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22twain
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Re: Already Made a QCD?

Post by 22twain »

QCDs do not need to be part of an RMD in order to be non-taxable.
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sport
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Re: Already Made a QCD?

Post by sport »

btenny wrote: Mon Mar 30, 2020 12:43 pm I think this is how it will work. This is how I am doing it. I also have already done some QCDs and plan to do more later this year.

You will get a W2 from your IRA administrator for any IRA withdrawals. You will report that as income on your 1040. But then you will also report your QCDs for the same amount on your 1040 as well. So your net taxable income due to IRA will be zero.

Hope this helps. I am not a tax accountant or lawyer so others may offer different opinions...

Good Luck.
That is correct, except the administrator will send an 1099R, not a W2. W2 is for salaries and wages.
Topic Author
jimcrawford01
Posts: 87
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Re: Already Made a QCD?

Post by jimcrawford01 »

Are RMDs PROHIBITED?. I can still w/d as much or as little as I choose, subject to all the other rules.
The language I have seen used is SUSPENDED. Needlessly confusing.
Thanks for the BogleHeads.
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GerryL
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Re: Already Made a QCD?

Post by GerryL »

jimcrawford01 wrote: Mon Mar 30, 2020 5:14 pm Are RMDs PROHIBITED?. I can still w/d as much or as little as I choose, subject to all the other rules.
The language I have seen used is SUSPENDED. Needlessly confusing.
Thanks for the BogleHeads.
NOT prohibited. Optional instead of required this year.

There are many people who need the money in their retirement accounts to live on. The RMD holiday is a gift for people who DON'T need the money to live on. Does nothing for those who do.
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David Jay
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Re: Already Made a QCD?

Post by David Jay »

QCD and RMD are not necessarily linked. The QCD allows charitable giving without showing income (where that income affects means tested programs).

I anticipate making QCDs in my year of 70 (My birthday is early in the year so I will be over 70.5) and my year of 71, even though RMDs are not required in those years.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
pshonore
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Re: Already Made a QCD?

Post by pshonore »

David Jay wrote: Mon Mar 30, 2020 7:16 pm QCD and RMD are not necessarily linked. The QCD allows charitable giving without showing income (where that income affects means tested programs).

I anticipate making QCDs in my year of 70 (My birthday is early in the year so I will be over 70.5) and my year of 71, even though RMDs are not required in those years.
Thought I read somewhere that you have to wait until you are 70 1/2 to make the QCD so wait until 6 months after your birthday.
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celia
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Re: Already Made a QCD?

Post by celia »

btenny wrote: Mon Mar 30, 2020 12:43 pm You will get a W2 1099-R from your IRA administrator for any IRA withdrawals.** You will report that as income on your 1040. But then you will also report your QCDs for the same amount on your 1040 as well. So your net taxable income due to IRA will be zero.
** Withdrawals include all the money that was withdrawn (RMDs, extra withdrawn to taxable, tax withholdings, Roth conversions, QCDs)
The QCDs are not taxable, but the rest is taxed as ordinary income. The only way withdrawals don't impact your taxes are if all the withdrawals are QCDs.
Last edited by celia on Mon Mar 30, 2020 10:32 pm, edited 1 time in total.
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David Jay
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Re: Already Made a QCD?

Post by David Jay »

pshonore wrote: Mon Mar 30, 2020 10:04 pm
David Jay wrote: Mon Mar 30, 2020 7:16 pm QCD and RMD are not necessarily linked. The QCD allows charitable giving without showing income (where that income affects means tested programs).

I anticipate making QCDs in my year of 70 (My birthday is early in the year so I will be over 70.5) and my year of 71, even though RMDs are not required in those years.
Thought I read somewhere that you have to wait until you are 70 1/2 to make the QCD so wait until 6 months after your birthday.
You are correct, you must actually be over 70.5 before you can make a QCD.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
fourwheelcycle
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Re: Already Made a QCD?

Post by fourwheelcycle »

My wife and I are making all of our intended QCDs this year, but not a penny extra for RMDs. Every dollar of RMDs will be fully taxable, no matter how much we have withdrawn for QCDs. Worse yet, in this down market every dollar of RMDs will require us to sell bonds. Our portfolio was 80/20 before the drop, so we want to conserve our bond nest egg as much as possible.
sport
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Re: Already Made a QCD?

Post by sport »

fourwheelcycle wrote: Tue Mar 31, 2020 6:29 am My wife and I are making all of our intended QCDs this year, but not a penny extra for RMDs. Every dollar of RMDs will be fully taxable, no matter how much we have withdrawn for QCDs. Worse yet, in this down market every dollar of RMDs will require us to sell bonds. Our portfolio was 80/20 before the drop, so we want to conserve our bond nest egg as much as possible.
A possibly better alternative is to make no QCDs this year and then make double amount QCDs next year. That will give you the tax benefit of the QCDs that you will not get this year.
carolinaman
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Re: Already Made a QCD?

Post by carolinaman »

sport wrote: Tue Mar 31, 2020 10:23 am
fourwheelcycle wrote: Tue Mar 31, 2020 6:29 am My wife and I are making all of our intended QCDs this year, but not a penny extra for RMDs. Every dollar of RMDs will be fully taxable, no matter how much we have withdrawn for QCDs. Worse yet, in this down market every dollar of RMDs will require us to sell bonds. Our portfolio was 80/20 before the drop, so we want to conserve our bond nest egg as much as possible.
A possibly better alternative is to make no QCDs this year and then make double amount QCDs next year. That will give you the tax benefit of the QCDs that you will not get this year.
Charities are going to have a really tough year, so I inclined to do more QCDs this year because of their need. I am blessed to be in a position where I can although I lost a ton in equities this last month.
Topic Author
jimcrawford01
Posts: 87
Joined: Mon May 19, 2008 5:23 pm

Re: Already Made a QCD?

Post by jimcrawford01 »

sport wrote: Mon Mar 30, 2020 12:40 pm
jimcrawford01 wrote: Mon Mar 30, 2020 12:32 pm I made a QCD. Checks cashed by the Charity. Then the CARES bill became law.
Can I simply take an IRA w/d in the amount (or greater) of the QCD in order to protect the tax benefit of the QCD, as intended?

Thanks.
Jim
No. The QCD is now just a tax-free distribution. If you take another distribution, it will be taxable income.
OP here.
Sport, I believe that your response is incorrect.
Silk McCue
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Re: Already Made a QCD?

Post by Silk McCue »

jimcrawford01 wrote: Wed Apr 01, 2020 7:04 am
sport wrote: Mon Mar 30, 2020 12:40 pm
jimcrawford01 wrote: Mon Mar 30, 2020 12:32 pm I made a QCD. Checks cashed by the Charity. Then the CARES bill became law.
Can I simply take an IRA w/d in the amount (or greater) of the QCD in order to protect the tax benefit of the QCD, as intended?

Thanks.
Jim
No. The QCD is now just a tax-free distribution. If you take another distribution, it will be taxable income.
OP here.
Sport, I believe that your response is incorrect.
Sport is correct on this statement. The ability to perform a QCD stands independent of taking any additional funds in the form of an RMD or additional taxable withdrawals. The only requirement regarding QCDs is that you must be 70.5 before you can do one and you can't do more than $100k per year. Any other restrictions based on the CARES act are just imaginings.

Cheers
Topic Author
jimcrawford01
Posts: 87
Joined: Mon May 19, 2008 5:23 pm

Re: Already Made a QCD?

Post by jimcrawford01 »

I stand corrected.
Seems so obvious now.
Thanks to all for the clarification.

Jim
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