Implementing a QCD at Fidelity

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dual
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Implementing a QCD at Fidelity

Post by dual » Thu Sep 06, 2018 12:36 pm

I'm going to have to start required minimum distributions from my IRA next year and I'm thinking of doing a qualified charitable distribution (QCD) from my Fidelity IRA. I would like some advice and tips from those of you who have done this already.

I would like to have a check made out in the name of the charity and to get my hands on it so I can be sure that there's no screw up. I would then mail the check to the charity.

My preference would be to call Fidelity and give the name of my charity and the amount and have them prepare a check that I can pick up at my local investor center. Has anyone been able to do this?

An alternative would be to have Fidelity mail the check to me.

In either case what documentation do I have to provide to Fidelity? Can I just call them up and give the information to a Rep verbally?

Any other tips and suggestions appreciated.

sport
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Re: Implementing a QCD at Fidelity

Post by sport » Thu Sep 06, 2018 1:10 pm

Even though you can take RMDs any time during the year you turn 70.5, you must actually be at least 70.5 to make a QCD. 70.4 will not qualify.

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dual
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Re: Implementing a QCD at Fidelity

Post by dual » Thu Sep 06, 2018 1:25 pm

sport wrote:
Thu Sep 06, 2018 1:10 pm
Even though you can take RMDs any time during the year you turn 70.5, you must actually be at least 70.5 to make a QCD. 70.4 will not qualify.
Thanks. Yes I am aware of the rules. Here is a good summary:

http://www.kitces.com/blog/qualified-ch ... irements/

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celia
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Re: Implementing a QCD at Fidelity

Post by celia » Thu Sep 06, 2018 1:35 pm

dual wrote:
Thu Sep 06, 2018 12:36 pm
In either case what documentation do I have to provide to Fidelity? Can I just call them up and give the information to a Rep verbally?
Have you asked them?

Your request sounds just like how it is handled at Vanguard, except that all Vanguard requests are mailed to the account owner, since they don't have local offices. They already know your birth date and when you turn 70.5. They already know how much is in your IRA and how much your RMD is for the year. They just need to know it is you calling in just like any other time you would call in.

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HueyLD
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Re: Implementing a QCD at Fidelity

Post by HueyLD » Thu Sep 06, 2018 1:37 pm

I think you should just call Fidelity and ask them questions directly. Fido is open 24x7.

I know that you can either fill out a form, or write a check against your IRA if you have a check writing privilege.

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dual
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Re: Implementing a QCD at Fidelity

Post by dual » Thu Sep 06, 2018 2:04 pm

I found the Fido withdrawal form at
https://www.fidelity.com/bin-public/060 ... drawal.pdf
and it answered some of my questions.

The form only specifies mailing the check to me or to the charity.

It states:
A Medallion signature guarantee is required:
• to send a check to an alternate address and your total distribution amount is greater than $10,000.
• if the address on the account has been changed within the past 10 days.

If the form is completed at a Fidelity Investor Center, the Medallion signature guarantee is not required.
Also states:
All sales initiated by this form are charged at rep-assisted processing commission levels. If you want online commissions, please place the trade online and then distribute from cash in Section 2.
To allow adequate time for processing, return this form
no later than November 30 or March 1, as applicable.
Fidelity cannot assume responsibility for making your
distribution by the April 1 IRS deadline for your initial
required minimum distribution (RMD) or the December 31
deadline for subsequent year RMDs.

sbaywriter
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Re: Implementing a QCD at Fidelity

Post by sbaywriter » Thu Sep 06, 2018 4:54 pm

Thanks for posting the link to the form. I have a Fidelity IRA but have not done any RMDs or QCDs, but have done both from Vanguard and am considering at some point consolidating at Fidelity, so interested in the answer to this question.

This following part was surprising to me because when I did a QCD from my Vanguard IRA, I simply called and told them the amount and name of the charity and it was processed and mailed to me the next day and I got it about 4 business days later (although they told me to allow 7-10 days).
To allow adequate time for processing, return this form
no later than November 30 or March 1, as applicable.
Fidelity cannot assume responsibility for making your
distribution by the April 1 IRS deadline for your initial
required minimum distribution (RMD) or the December 31
deadline for subsequent year RMDs
I think I would call and clarify - how long does it take them to process this form? And can you just phone it in instead and if so how long does that take?

Lynette
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Re: Implementing a QCD at Fidelity

Post by Lynette » Thu Sep 06, 2018 5:26 pm

I did QCDs from both Vanguard and Fidelity. I simply called them, gave the name of the charity and within a few days got the checks. Call them. I found them most professional and helpful. I did not use the form. I was on the phone for about 10 minutes - no form.

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HueyLD
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Re: Implementing a QCD at Fidelity

Post by HueyLD » Thu Sep 06, 2018 5:29 pm

Did you pick up the QCD checks at Fido's local office?

Lynette
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Re: Implementing a QCD at Fidelity

Post by Lynette » Thu Sep 06, 2018 5:41 pm

No, Fido mailed them to me. I have two Fidelity office within 3 miles from my house. I was not impressed with the agents with whom I interacted. They may have been new. In my experience, the specialists are at the Fidelity main office. So I do not think that having an office is an advantage.

jbranx
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Re: Implementing a QCD at Fidelity

Post by jbranx » Thu Sep 06, 2018 11:35 pm

My wife and I have done QCDs thru Fidelity the last two years by requesting checkbooks for our IRA accounts. Simple to do and then we simply write the checks to the charity and mail them directly. We keep those checkbooks well hidden so we don't inadvertently use them to pay for groceries! We keep copies of the checks and the confirms from the charities for our tax records. The IRS simply asks you to check a little box on the 1040 that your distribution was a QCD.

RetiredCSProf
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Re: Implementing a QCD at Fidelity

Post by RetiredCSProf » Fri Sep 07, 2018 11:16 pm

I recently turned 70.5 and took QCDs from Fido. I downloaded and printed the online form, which offers two options: Mail checks directly to charity or mail checks to account owner. I filled out the form, brought it to the local Fido office, signed it in front of a representative, and turned it in to them. There is no minimum on the size of the check -- can be one dollar.

Advantage of mailing checks directly to charity: they have only your name and not your address, so can't hound you to donate more.

Advantage of having checks mailed to account owner: you can include a note (e.g., "in memory of ..." ) with the check that you send and may receive a receipt from the charity (especially if amount of check is $250 or more).

I called Fido's main number the following week with some questions. That rep told me that I can setup a Fido checking account and write QCD checks directly from the checking account. I haven't done this and was not quite convinced that it was OK to do it this way, but it sounds like others on this forum have done just that.

sport
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Re: Implementing a QCD at Fidelity

Post by sport » Fri Sep 07, 2018 11:20 pm

RetiredCSProf wrote:
Fri Sep 07, 2018 11:16 pm
Advantage of mailing checks directly to charity: they have only your name and not your address, so can't hound you to donate more.
One of the requirements for a QCD is that you must receive a letter of acknowledgement from the charity. So, if you do not give them your address, they cannot send you the letter you need.

RetiredCSProf
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Re: Implementing a QCD at Fidelity

Post by RetiredCSProf » Sat Sep 08, 2018 1:48 pm

I apologize if I was unclear. Acknowledgment is needed if amount of check is $250 or more. There is no minimum on the size of the QCD check.

[edited to add:] The acknowledgment is for your records, in case audited, and not included with your tax return.

blgaarder
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Re: Implementing a QCD at Fidelity

Post by blgaarder » Wed Sep 12, 2018 10:22 am

Just to be clear: is an annual acknowledgment listing the total donated (maybe with itemizations) or must there be one for the QCD?

Thanks

sport
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Re: Implementing a QCD at Fidelity

Post by sport » Wed Sep 12, 2018 10:38 am

blgaarder wrote:
Wed Sep 12, 2018 10:22 am
Just to be clear: is an annual acknowledgment listing the total donated (maybe with itemizations) or must there be one for the QCD?

Thanks
The acknowledgements come from the charities that receive the QCD. The IRA custodian sends a 1099-R that shows withdrawals. The 1099 does not separate QCDs from any other withdrawals. It is lumped with any other taxable withdrawals. You separate out the QCDs when you fill out your tax form.

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dual
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Re: Implementing a QCD at Fidelity

Post by dual » Wed Sep 12, 2018 11:29 am

jbranx wrote:
Thu Sep 06, 2018 11:35 pm
My wife and I have done QCDs thru Fidelity the last two years by requesting checkbooks for our IRA accounts. Simple to do and then we simply write the checks to the charity and mail them directly. We keep those checkbooks well hidden so we don't inadvertently use them to pay for groceries! We keep copies of the checks and the confirms from the charities for our tax records. The IRS simply asks you to check a little box on the 1040 that your distribution was a QCD.
That seems like a great way to go. The relevant rule from Kitces is
While the process of completing a QCD to a charity is fairly straightforward, the key administrative requirement is that the distribution check must be made payable directly to the charitable entity. If the funds go to the IRA owner and are then passed along to the charity, it is still a taxable distribution to the IRA owner and not a QCD.
So, if challenged, you can argue that you never had possession of the contribution. It was withdrawn from the IRA directly to the charity checking account.

I like this. It is simple and you are in control without having to fill out forms with Fido, wait for checks, worry whether they got lost in the mail, etc.

I am going to open a checking account for my IRA at Fido and try the process out with a taxable (non-RMD) withdrawal this year to see how the paperwork works. I cannot do a QCD until February of 2019 but I can do withdrawals from IRA without any penalty since I am older than 59 1/2.

sport
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Re: Implementing a QCD at Fidelity

Post by sport » Wed Sep 12, 2018 11:46 am

dual wrote:
Wed Sep 12, 2018 11:29 am
So, if challenged, you can argue that you never had possession of the contribution. It was withdrawn from the IRA directly to the charity checking account.

I like this. It is simple and you are in control without having to fill out forms with Fido, wait for checks, worry whether they got lost in the mail, etc.
I agree, this is a good way to make QCDs. However, you have to be very careful if you write these checks near the end of the year. The money does not come out of your account until the checks are actually cashed. If the charity waits until January to cash the check, it will not be part of your RMD for the year you wrote it, and your RMD requirement will not have been completed. The penalty for not taking the required amount is 50% of the shortfall, unless you plead with the IRS to give you a break. In any case, I suggest reviewing your RMD status in December to make sure that the full amount has been taken.

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