QCDs from RMD - 1099R [Qualified Charitable Distributions]

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InvestorWannabe18
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QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by InvestorWannabe18 » Thu Aug 30, 2018 3:47 pm

I made four QCDs from my USAA RMD. But my 1099R shows the full RMD under "Taxable Amount". I called USAA and they said that's their policy - i.e., to report your entire RMD as Taxable and not to adjust this for your QCDs. If a QCD is "non-taxable" per IRS then why doesn't the 1099R reflect this? Is there anyone with experience with a company who is more customer oriented on this?

jdb
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jdb » Thu Aug 30, 2018 4:13 pm

Your tax preparer will reflect on your 1040 that the amount of the QCD is non taxable. The fiduciary did it correctly, it is not their obligation to determine whether your QCD went to a qualified 501(c)(3) or that you actually remitted the check to the charity. Be sure to keep a copy of the direct check to the charity and their letter to you acknowledging the donation in your tax records. Also be sure the charity is a qualified beneficiary. Good luck.
Last edited by jdb on Thu Aug 30, 2018 4:29 pm, edited 1 time in total.

kaneohe
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Thu Aug 30, 2018 4:23 pm

Schwab does it the same way. I don't know why they aren't more "customer oriented" either since they make out
the check and know who it's made out to. I just adjust for it. Total distributions in 1040 line 15a; the taxable part on 15b; QCD as an explanatory notation near line 15.

If by chance you have basis in the TIRA, the QCDs come out of the deductible contributions and the earnings, not the basis. If you follow the instructions carefully this will be a natural fallout from F8606.

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Sheepdog
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by Sheepdog » Thu Aug 30, 2018 4:46 pm

Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. There's no way Vanguard would know if the checks I wrote were QCDs or for other purposes. Box 2b showed an "x" in the "taxable amount not determined". It is up to the taxpayer to report it correctly on his/her tax return. (And, or course, have documentation if audited.)
Last edited by Sheepdog on Thu Aug 30, 2018 4:51 pm, edited 1 time in total.
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tomd37
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by tomd37 » Thu Aug 30, 2018 4:48 pm

I agree with both jdb and Kaneohe. The investment companies have no positive knowledge nor the responsibility to determine if the payee is a qualified charitable organization. I've personally been doing QCDs for the past ten years (in those years it was available) and reporting the 1099-R info correctly on lines 15a and 15b. I do a number of tax returns each year in the AARP Foundation Tax-Aide program that contain QCDs. In fact now with the new tax law I at least mention to some clients that it might behoove them financially to find out more info on QCDs. I can't give them financial advice but I can at least suggest they find out more info.
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One Ping
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by One Ping » Thu Aug 30, 2018 5:56 pm

Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D

One Ping
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jdb » Thu Aug 30, 2018 6:15 pm

One Ping wrote:
Thu Aug 30, 2018 5:56 pm
Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D

One Ping
We have different concepts of song and dance. Just sent Vanguard message today listing 7 QCD checks for over $25K in aggregate, my flagship rep called me and verified, and in few days will receive the 7 checks from Vanguard for me to send to the 501(c)(3) organizations. Actually quite easy and like the paperwork trail.

kaneohe
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Thu Aug 30, 2018 6:24 pm

jdb wrote:
Thu Aug 30, 2018 6:15 pm
......................................................
We have different concepts of song and dance. Just sent Vanguard message today listing 7 QCD checks for over $25K in aggregate, my flagship rep called me and verified, and in few days will receive the 7 checks from Vanguard for me to send to the 501(c)(3) organizations. Actually quite easy and like the paperwork trail.
Agree w/you......esp. if there are many checks and they are generally to the same folks from yr to yr. Have
a text message that is saved each yr, then edited for any changes in recipients or $$ amounts the next. Much easier than having to write separate checks if there are many. Looks much better too esp. you have handwriting like mine. :happy Schwab does it the same way.

MarkNYC
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by MarkNYC » Thu Aug 30, 2018 6:46 pm

One Ping wrote:
Thu Aug 30, 2018 5:56 pm
Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D
Writing checks might not qualify. IRC section 408(d)(8) defines a QCD as a distribution from an IRA that satisfies 2 criteria:

1. Paid after the IRA owner reaches age 70.5, and
2. "made directly by the trustee to an organization described in section 170(b)(1)(A)"

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One Ping
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by One Ping » Thu Aug 30, 2018 7:15 pm

jdb wrote:
Thu Aug 30, 2018 6:15 pm
We have different concepts of song and dance. Just sent Vanguard message today listing 7 QCD checks for over $25K in aggregate, my flagship rep called me and verified, and in few days will receive the 7 checks from Vanguard for me to send to the 501(c)(3) organizations. Actually quite easy and like the paperwork trail.
I agree, it's not really a big deal, it's just more complicated than what some other places do. Schwab, I think, will send the check directly to the charity. You are right about the paper trail.
"Re-verify our range to target ... one ping only."

tomd37
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by tomd37 » Thu Aug 30, 2018 7:35 pm

I have used the same method as jdb mentioned for the past ten years with my Flagship rep and they have all mentioned how easy it is for them when I email the list the day before our scheduled call.
Tom D.

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cheese_breath
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by cheese_breath » Thu Aug 30, 2018 7:36 pm

TIAA does it too, so don't let it worry you.
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Thu Aug 30, 2018 7:40 pm

One Ping wrote:
Thu Aug 30, 2018 7:15 pm
jdb wrote:
Thu Aug 30, 2018 6:15 pm
We have different concepts of song and dance. Just sent Vanguard message today listing 7 QCD checks for over $25K in aggregate, my flagship rep called me and verified, and in few days will receive the 7 checks from Vanguard for me to send to the 501(c)(3) organizations. Actually quite easy and like the paperwork trail.
I agree, it's not really a big deal, it's just more complicated than what some other places do. Schwab, I think, will send the check directly to the charity. You are right about the paper trail.
Schwab will also send the checks( made out to charity) to you if requested. Much easier for you to stuff in the charity self-addressed envelope than to have someone (you) tell someone else (Schwab) where to mail it.

sport
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Thu Aug 30, 2018 7:51 pm

MarkNYC wrote:
Thu Aug 30, 2018 6:46 pm
One Ping wrote:
Thu Aug 30, 2018 5:56 pm
Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D
Writing checks might not qualify. IRC section 408(d)(8) defines a QCD as a distribution from an IRA that satisfies 2 criteria:

1. Paid after the IRA owner reaches age 70.5, and
2. "made directly by the trustee to an organization described in section 170(b)(1)(A)"
This is why you need to use a check drawn on your IRA account. If you withdraw the cash and then write the check on your bank account, it does not meet the requirements for a QCD. BTW, Vanguard checks have a minimum amount of $250.

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dodecahedron
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by dodecahedron » Thu Aug 30, 2018 8:09 pm

kaneohe wrote:
Thu Aug 30, 2018 4:23 pm
Schwab does it the same way. I don't know why they aren't more "customer oriented" either since they make out
the check and know who it's made out to.
The custodian has no way to know whether you got any ¨quid pro quo¨ from the charity. In other words, did the check you remitted made out to the ¨XYZ University¨ entitle you to season tickets to football games, seats at a fancy banquet, your childś tuition or did you get nothing in exchange for you donation.

Donor Advised Funds (DAFs) make (at least some attempts at) such inquiries when they remit checks to charities you have directed, but they also charge significant fees (as a percentage of assets) which covers their costs of doing stuff like that. Those DAF fees also cover their costs of looking up to make sure that ¨ABC Institute of the Arts¨ is actually a 501c-3 in current good standing with the IRS.

IRA fees can be a lot lower than the DAF fees, in part because they don´t have to do stuff like that. The burden is on the account holder to verify that the donation qualified for the charitable exclusion and to so attest to the IRS. If there is an issue they want to audit, they are not going to take it up with your IRA custodian, they are going to take it up with you. So it is the IRA owner who needs to specifically attest that they are claiming a QCD exclusion.

kaneohe
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Thu Aug 30, 2018 8:36 pm

dodecahedron.......excellent points....the world is more complex than the sheltered ever imagined.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by Alan S. » Thu Aug 30, 2018 10:45 pm

One Ping wrote:
Thu Aug 30, 2018 5:56 pm
Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D

One Ping
If you use IRA check writing for your QCDs, unless your custodian has adopted special tracking procedures, they do not know about this "distribution" unless the check is cashed and returned. So if you write a December check or even earlier make sure the charity deposits the check quickly. If the custodian does not receive the cancelled check evidence, your 1099R will be short of your RMD amount. This is the main risk of using check writing for QCDs because you have no direct control when it is cashed.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by Sheepdog » Thu Aug 30, 2018 10:52 pm

One Ping wrote:
Thu Aug 30, 2018 5:56 pm
Sheepdog wrote:
Thu Aug 30, 2018 4:46 pm
Vanguard does it that way also. For example, in 2017 on my IRA 1099R my entire distribution is shown as "taxable" while half of it was actually QCDs. Some of the QCDs were submitted to the charity with checks from Vanguard and the rest were donated by IRA checks I wrote. (emphasis added)

Wow! This is cool! Thanks, Sheepdog. :sharebeer

I did not know you could write checks against your Vanguard IRA. I will be making QCDs once my RMDs start and was none too thrilled about the song and dance of Vanguard making out the check to the charity and mailing it to me and then my having to send it on to the recipient. Much cleaner to just write the check and send it myself. :D

One Ping
It is not a check from your IRA, but it is a check from a particular fund in your IRA which allows checks to be written. Select Vanguard funds, including money market and most bond funds, offer the option to write checks against the account's balance. Note that the minimum amount a check may be written on most, it not all, of those funds is $250.
Last edited by Sheepdog on Thu Aug 30, 2018 11:06 pm, edited 1 time in total.
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by Sheepdog » Thu Aug 30, 2018 11:01 pm

MarkNYC wrote:
Thu Aug 30, 2018 6:46 pm

Writing checks might not qualify. IRC section 408(d)(8) defines a QCD as a distribution from an IRA that satisfies 2 criteria:

1. Paid after the IRA owner reaches age 70.5, and
2. "made directly by the trustee to an organization described in section 170(b)(1)(A)"
Writing a check from a fund in the IRA which allows check writing does indeed qualify. The check has to be written directly from those IRA funds to the charity
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

MarkNYC
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by MarkNYC » Fri Aug 31, 2018 8:46 am

Sheepdog wrote:
Thu Aug 30, 2018 11:01 pm
MarkNYC wrote:
Thu Aug 30, 2018 6:46 pm

Writing checks might not qualify. IRC section 408(d)(8) defines a QCD as a distribution from an IRA that satisfies 2 criteria:

1. Paid after the IRA owner reaches age 70.5, and
2. "made directly by the trustee to an organization described in section 170(b)(1)(A)"
Writing a check from a fund in the IRA which allows check writing does indeed qualify. The check has to be written directly from those IRA funds to the charity
Sheepdog -- You may be right. But how do you know for sure? I haven't seen anything in writing on this question. After all, when the taxpayer writes the check out of the IRA account/fund and mails it to the charity, the trustee is not involved at all in the transaction. Does this method still constitute the payment being "made directly by the trustee to an organization..."? Where have you seen a reliable answer to this question?

sport
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Fri Aug 31, 2018 9:29 am

MarkNYC wrote:
Fri Aug 31, 2018 8:46 am
Sheepdog wrote:
Thu Aug 30, 2018 11:01 pm
MarkNYC wrote:
Thu Aug 30, 2018 6:46 pm

Writing checks might not qualify. IRC section 408(d)(8) defines a QCD as a distribution from an IRA that satisfies 2 criteria:

1. Paid after the IRA owner reaches age 70.5, and
2. "made directly by the trustee to an organization described in section 170(b)(1)(A)"
Writing a check from a fund in the IRA which allows check writing does indeed qualify. The check has to be written directly from those IRA funds to the charity
Sheepdog -- You may be right. But how do you know for sure? I haven't seen anything in writing on this question. After all, when the taxpayer writes the check out of the IRA account/fund and mails it to the charity, the trustee is not involved at all in the transaction. Does this method still constitute the payment being "made directly by the trustee to an organization..."? Where have you seen a reliable answer to this question?
When the check is cashed, the payment is made directly by the trustee. 590-B does not say anything about who writes the check. It states where the money must come from (the trustee).

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Sheepdog
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by Sheepdog » Fri Aug 31, 2018 10:05 am

MarkNYC wrote:
Fri Aug 31, 2018 8:46 am
[
Sheepdog -- You may be right. But how do you know for sure? I haven't seen anything in writing on this question. After all, when the taxpayer writes the check out of the IRA account/fund and mails it to the charity, the trustee is not involved at all in the transaction. Does this method still constitute the payment being "made directly by the trustee to an organization..."? Where have you seen a reliable answer to this question?
This is what the IRS says https://www.irs.gov/retirement-plans/re ... ithdrawals It does not specifically say that my IRA bond fund check to a charity is allowed as a QCD. What it says, as others have said, and you can find by Googling the question, is that the donation must go directly from an IRA to the charity and not pass through the contributor. When you write a check from a fund in the IRA to the charity, the money does not pass through you. The check, and therefore the money, goes directly to the charity from your IRA when the check is cashed by the charity.

What I do for record keeping, is that after the check has been cleared and my IRA has the transaction noted, I download a copy of that cleared check from Vanguard, print it out, and keep it for my records when I submit my tax return.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

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HueyLD
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by HueyLD » Fri Aug 31, 2018 10:28 am

I think those major brokerages and mutual fund companies very likely received some kind of IRS blessing before allowing check writing by IRA owners. The money comes from the IRA directly to a qualified charity. I think the key point is that the money must not go thru another person.

MarkNYC
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by MarkNYC » Fri Aug 31, 2018 10:42 am

HueyLD wrote:
Fri Aug 31, 2018 10:28 am
I think those major brokerages and mutual fund companies very likely received some kind of IRS blessing before allowing check writing by IRA owners. The money comes from the IRA directly to a qualified charity. I think the key point is that the money must not go thru another person.
Huey,

I understand that reasoning, which was also presented by sport and sheepdog, and it may be valid. But I seem to recall reading (perhaps incorrectly?) that a trustee-to-trustee transfer was required, and the only example given in Pub 590 has the taxpayer directing the trustee to send the payment directly to the charity - hence my uneasiness with the taxpayer checkwriting method.

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HueyLD
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by HueyLD » Fri Aug 31, 2018 10:47 am

I am not comfortable either. BUT it is hard to imagine that all those major brokerages allow QCD check writing by IRA owners without getting some kind of regulatory understanding.

I wish someone could find an authoritative interpretation.

MarkNYC
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by MarkNYC » Fri Aug 31, 2018 10:54 am

HueyLD wrote:
Fri Aug 31, 2018 10:47 am
I am not comfortable either. BUT it is hard to imagine that all those major brokerages allow QCD check writing by IRA owners without getting some kind of regulatory understanding.
I'm not sure the brokerages would care one way or another. I don't think their 1099-R reporting would change regardless of whether the check/distribution written from the IRA account qualified as a QCD or not.

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HueyLD
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by HueyLD » Fri Aug 31, 2018 11:00 am

When I am old enough to make QCD’s, I hope that the IRS has official rules on “who writes the checks.”

Until then, I will advise others to go with the safe route.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Fri Aug 31, 2018 11:30 am

MarkNYC wrote:
Fri Aug 31, 2018 10:54 am
HueyLD wrote:
Fri Aug 31, 2018 10:47 am
I am not comfortable either. BUT it is hard to imagine that all those major brokerages allow QCD check writing by IRA owners without getting some kind of regulatory understanding.
I'm not sure the brokerages would care one way or another. I don't think their 1099-R reporting would change regardless of whether the check/distribution written from the IRA account qualified as a QCD or not.
The brokerages do not care. As far as they are concerned, it is a normal withdrawal. They don't care if the check is a donation, or a payment on your electric bill. It does not become a QCD until you claim it on your tax form. The 1099R shows QCDs as ordinary withdrawals, which are added to any other ordinary withdrawals you may have made.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by RudyS » Fri Aug 31, 2018 12:40 pm

This comes up every few months. Fidelity specifically states that the check writing method is OK. Vanguard doesn't say but "allows" it. My opinion: when you write a check on a fund in an IRA,with the charity as the payee, you are actually issuing an order to the fund to make the payment as directed on the check. You never see the money. The transaction is to all intents and purposes, a payment from the fund directly to the charity. How is this any different from sending in, or calling in, instructions to the fund to make the payment? I have been perfectly happy going this route for several years now.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by celia » Fri Aug 31, 2018 1:01 pm

Sheepdog wrote:
Fri Aug 31, 2018 10:05 am
What I do for record keeping, is that after the check has been cleared and my IRA has the transaction noted, I download a copy of that cleared check from Vanguard, print it out, and keep it for my records when I submit my tax return.
So, you save some "effort" at the beginning in not having to contact Vanguard directly, but then you put in the "effort" at the end by completing your paper trail. The effort at the end is likely more than what you can do with one phone call at the outset if you are going to give to multiple charities. One phone call, one copying of all the checks before distributing vs. writing multiple checks and distributing and waiting for all checks to clear before you download each cashed check.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Fri Aug 31, 2018 2:53 pm

celia wrote:
Fri Aug 31, 2018 1:01 pm
Sheepdog wrote:
Fri Aug 31, 2018 10:05 am
What I do for record keeping, is that after the check has been cleared and my IRA has the transaction noted, I download a copy of that cleared check from Vanguard, print it out, and keep it for my records when I submit my tax return.
So, you save some "effort" at the beginning in not having to contact Vanguard directly, but then you put in the "effort" at the end by completing your paper trail. The effort at the end is likely more than what you can do with one phone call at the outset if you are going to give to multiple charities. One phone call, one copying of all the checks before distributing vs. writing multiple checks and distributing and waiting for all checks to clear before you download each cashed check.
There is another consideration: When Vanguard writes the check, the money comes out of your account immediately, and you have no confirmation that the charity ever received the check or cashed it. The charity is supposed to send a letter of confirmation. However, this cannot be relied upon. When you write the check yourself, you can see it has been cashed when it shows up as a withdrawal from your account.

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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jebmke » Fri Aug 31, 2018 2:56 pm

sport wrote:
Fri Aug 31, 2018 2:53 pm
celia wrote:
Fri Aug 31, 2018 1:01 pm
Sheepdog wrote:
Fri Aug 31, 2018 10:05 am
What I do for record keeping, is that after the check has been cleared and my IRA has the transaction noted, I download a copy of that cleared check from Vanguard, print it out, and keep it for my records when I submit my tax return.
So, you save some "effort" at the beginning in not having to contact Vanguard directly, but then you put in the "effort" at the end by completing your paper trail. The effort at the end is likely more than what you can do with one phone call at the outset if you are going to give to multiple charities. One phone call, one copying of all the checks before distributing vs. writing multiple checks and distributing and waiting for all checks to clear before you download each cashed check.
There is another consideration: When Vanguard writes the check, the money comes out of your account immediately, and you have no confirmation that the charity ever received the check or cashed it. The charity is supposed to send a letter of confirmation. However, this cannot be relied upon. When you write the check yourself, you can see it has been cashed when it shows up as a withdrawal from your account.
Is it possible to do anonymous QCDs? Most of what we donate from our Donor Advised Fund is anonymous but once I run that down I will shift to QCDs when I turn 70. I'd hate to give up the ability to donate anonymously. That is a major feature of DAFs.
When you discover that you are riding a dead horse, the best strategy is to dismount.

sport
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Fri Aug 31, 2018 2:58 pm

jebmke wrote:
Fri Aug 31, 2018 2:56 pm
sport wrote:
Fri Aug 31, 2018 2:53 pm
celia wrote:
Fri Aug 31, 2018 1:01 pm
Sheepdog wrote:
Fri Aug 31, 2018 10:05 am
What I do for record keeping, is that after the check has been cleared and my IRA has the transaction noted, I download a copy of that cleared check from Vanguard, print it out, and keep it for my records when I submit my tax return.
So, you save some "effort" at the beginning in not having to contact Vanguard directly, but then you put in the "effort" at the end by completing your paper trail. The effort at the end is likely more than what you can do with one phone call at the outset if you are going to give to multiple charities. One phone call, one copying of all the checks before distributing vs. writing multiple checks and distributing and waiting for all checks to clear before you download each cashed check.
There is another consideration: When Vanguard writes the check, the money comes out of your account immediately, and you have no confirmation that the charity ever received the check or cashed it. The charity is supposed to send a letter of confirmation. However, this cannot be relied upon. When you write the check yourself, you can see it has been cashed when it shows up as a withdrawal from your account.
Is it possible to do anonymous QCDs? Most of what we donate from our Donor Advised Fund is anonymous but once I run that down I will shift to QCDs when I turn 70. I'd hate to give up the ability to donate anonymously. That is a major feature of DAFs.
The QCD rules require a letter of acknowledgement from the charity. So, anonymous would not work.

jebmke
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jebmke » Fri Aug 31, 2018 2:59 pm

sport wrote:
Fri Aug 31, 2018 2:58 pm
The QCD rules require a letter of acknowledgement from the charity. So, anonymous would not work.
That is a bummer. I'll have to re-think our game plan then. Probably skip the QCDs for most things.
When you discover that you are riding a dead horse, the best strategy is to dismount.

sport
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Location: Cleveland, OH

Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by sport » Fri Aug 31, 2018 3:17 pm

jebmke wrote:
Fri Aug 31, 2018 2:59 pm
sport wrote:
Fri Aug 31, 2018 2:58 pm
The QCD rules require a letter of acknowledgement from the charity. So, anonymous would not work.
That is a bummer. I'll have to re-think our game plan then. Probably skip the QCDs for most things.
If you skip QCDs, you are giving up a very good tax break. A QCD reduces your taxable income even if you do not itemize. This can affect tax brackets, the taxability of capital gains and qualified dividends, the taxability of social security, and state income taxes. It can also count towards your RMD. Since you have to withdraw the money anyway, if you want to support a charity(s), this is probably the best way to do it.

jebmke
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jebmke » Fri Aug 31, 2018 3:24 pm

sport wrote:
Fri Aug 31, 2018 3:17 pm
jebmke wrote:
Fri Aug 31, 2018 2:59 pm
sport wrote:
Fri Aug 31, 2018 2:58 pm
The QCD rules require a letter of acknowledgement from the charity. So, anonymous would not work.
That is a bummer. I'll have to re-think our game plan then. Probably skip the QCDs for most things.
If you skip QCDs, you are giving up a very good tax break. A QCD reduces your taxable income even if you do not itemize. This can affect tax brackets, the taxability of capital gains and qualified dividends, the taxability of social security, and state income taxes. It can also count towards your RMD. Since you have to withdraw the money anyway, if you want to support a charity(s), this is probably the best way to do it.
Yes, but that presents a lot of issues locally. I live in a small town. Do you happen to know if community foundations are considered "private" and not eligible for QCDs?
When you discover that you are riding a dead horse, the best strategy is to dismount.

stlrick
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by stlrick » Fri Aug 31, 2018 3:46 pm

jebmke wrote:
Fri Aug 31, 2018 3:24 pm
sport wrote:
Fri Aug 31, 2018 3:17 pm
jebmke wrote:
Fri Aug 31, 2018 2:59 pm
sport wrote:
Fri Aug 31, 2018 2:58 pm
The QCD rules require a letter of acknowledgement from the charity. So, anonymous would not work.
That is a bummer. I'll have to re-think our game plan then. Probably skip the QCDs for most things.
If you skip QCDs, you are giving up a very good tax break. A QCD reduces your taxable income even if you do not itemize. This can affect tax brackets, the taxability of capital gains and qualified dividends, the taxability of social security, and state income taxes. It can also count towards your RMD. Since you have to withdraw the money anyway, if you want to support a charity(s), this is probably the best way to do it.
Yes, but that presents a lot of issues locally. I live in a small town. Do you happen to know if community foundations are considered "private" and not eligible for QCDs?
I have found the IRS charitable organization search page to be very easy to use:

https://www.irs.gov/charities-non-profi ... ion-search

jebmke
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jebmke » Fri Aug 31, 2018 3:56 pm

Yes, I have looked at their site quite a bit (I am a tax preparer). I have not found any specific references to community foundations.

The link you provided refers to all TE organizations. Not all 501(c)(3)s are eligible to receive QCDs even though they might be eligible for Schedule A deductions or Donor Advised Fund distributions. QCDs are restricted. Private foundations are ineligible as are some pass-through charities.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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One Ping
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by One Ping » Fri Aug 31, 2018 5:05 pm

stlrick wrote:
Fri Aug 31, 2018 3:46 pm
I have found the IRS charitable organization search page to be very easy to use:
https://www.irs.gov/charities-non-profi ... ion-search
jebmke wrote:
Fri Aug 31, 2018 3:56 pm
The link you provided refers to all TE organizations. Not all 501(c)(3)s are eligible to receive QCDs even though they might be eligible for Schedule A deductions or Donor Advised Fund distributions. QCDs are restricted.
I too have been looking for a "QCD-specific" link or list of eligible organizations for a long time. So far no joy. :( IRS web site has not yielded any results so far.
"Re-verify our range to target ... one ping only."

jdb
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jdb » Fri Aug 31, 2018 6:09 pm

jebmke wrote:
Fri Aug 31, 2018 3:56 pm
Yes, I have looked at their site quite a bit (I am a tax preparer). I have not found any specific references to community foundations.

The link you provided refers to all TE organizations. Not all 501(c)(3)s are eligible to receive QCDs even though they might be eligible for Schedule A deductions or Donor Advised Fund distributions. QCDs are restricted. Private foundations are ineligible as are some pass-through charities.
Where did you get the information that some 501(c)(3) organizations, other than donor advised funds which clearly are not qualified, do not qualify for QCD’s? If not qualified, what is the official source for those that qualify?

kaneohe
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Fri Aug 31, 2018 6:22 pm

here's one: https://www.kitces.com/blog/qualified-c ... uirements/

if you click on that code number, you get this which looks official
https://www.law.cornell.edu/uscode/text/26/170

one small problem........I don't understand a word of it. Perhaps you can help there.

jebmke
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by jebmke » Sat Sep 01, 2018 10:42 am

jdb wrote:
Fri Aug 31, 2018 6:09 pm
jebmke wrote:
Fri Aug 31, 2018 3:56 pm
Yes, I have looked at their site quite a bit (I am a tax preparer). I have not found any specific references to community foundations.

The link you provided refers to all TE organizations. Not all 501(c)(3)s are eligible to receive QCDs even though they might be eligible for Schedule A deductions or Donor Advised Fund distributions. QCDs are restricted. Private foundations are ineligible as are some pass-through charities.
Where did you get the information that some 501(c)(3) organizations, other than donor advised funds which clearly are not qualified, do not qualify for QCD’s? If not qualified, what is the official source for those that qualify?
That is what I am trying to find out. The code specifically excludes Supporting Organizations and Donor Advised Funds but I have read that private foundations are also excluded. I have not been able to sort out the details. So I don't know if that includes more general foundations -- for example, if I wanted to QCD to the Bill Gates Foundation or my community foundation -- would that be permitted?
When you discover that you are riding a dead horse, the best strategy is to dismount.

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HueyLD
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by HueyLD » Sat Sep 01, 2018 11:19 am

DAFs, private non-operating foundations and supporting organizations are not eligible to receive money from QCDs.
You may want to ask your community foundation if it fits one of the above categories.

Vanguard Charitable has an article on such issues.
https://www.vanguardcharitable.org/news ... ble-giving

The governing law is the Pension Protection Act of 2006.

kaneohe
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by kaneohe » Sat Sep 01, 2018 12:10 pm

more info but no specific details: https://www.irs.gov/charities-non-profi ... -charities
https://www.irs.gov/charities-non-profi ... -charities

if I had to guess: Gates Foundation= private; local community foundation= public ...........but I really don't know...
of course you could ask them

InvestorWannabe18
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Re: QCDs from RMD - 1099R [Qualified Charitable Distributions]

Post by InvestorWannabe18 » Mon Sep 10, 2018 12:04 pm

Thanks!!! This was my first posting on Bogleheads and I'm really impressed with the responses. I guess I was too hard on USAA as they seem to be following the industry standards and your explanations as to 'why' they operate this way helped me to understand (although I still find it bloody inconvenient). I don't write the checks to charities myself; instead I provided the fiduciary with a list of charities, individual letters to the charities and addressed/stamped envelopes. They did provide me letters of confirmation (which I hope will help with my Tax Prep). Also, as noted by "sheepdog" box 2b of the 1099R is marked "Taxable Amount Not Determined". Once again, thanks for the advice…

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