QCD(qualified charitable distribution) and Schwab

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LearningAlot
Posts: 45
Joined: Thu Aug 02, 2018 8:43 am

QCD(qualified charitable distribution) and Schwab

Post by LearningAlot »

I will be assisting my mother in making a QCD from her Schwab Traditional IRA. She is 87 years old.

Before I get into it with Schwab, was wondering if anyone had experience with Schwab on this and
could share the key steps to make it happen.

Thanks in advance!
kaneohe
Posts: 6744
Joined: Mon Sep 22, 2008 12:38 pm

Re: QCD(qualified charitable distribution) and Schwab

Post by kaneohe »

I have done this for a number of yrs w/ Schwab. In order to minimize the amount withdrawn from her IRA, you will want the QCD to count toward the RMD so, if possible, do it before the RMD is complete. (you could also do it after the RMD is complete but then you will have withdrawn the RMD + the QCD ........more than the RMD). In prior yrs, I have sent Schwab a letter of instructions detailing the organizations
and the amounts to be given to each and , of course, the personal info, acct. no. and where to send the checks. It usually takes a wk or two to get the checks. I then mail the checks myself.
In order to be counted for this yr QCD, it would be nice (not sure if absolutely necessary since the withdrawal was already made this yr) to have the charities receive them this yr and give you a receipt reflecting a gift for this yr. I make the request to Schwab by early November to allow time for checks to be processed , mailed & received by you , then sent and received by charity (earlier might be better?).
You also need to make sure you have cash in the IRA so sell securities in the IRA if necessary. I don't know if Schwab will sell themselves if there isn't enough cash, but if they do, they will certainly charge you for doing it.

In recent yrs., you have been able to get checks and write your own off the IRA. You still need cash in the IRA to support the checks.
Since the withdrawal from the IRA will not happen until the charity receives the check and deposits it, it is more critical that you allow time for that withdrawal to happen this yr or else the QCD won't count for this yr and you may be penalized for not taking the RMD completely.
Being able to write your own check, though, is handy if a spur-of-the-moment opportunity comes along.
Alan S.
Posts: 9976
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: QCD(qualified charitable distribution) and Schwab

Post by Alan S. »

kaneohe wrote: Tue Apr 30, 2019 4:08 pm I have done this for a number of yrs w/ Schwab. In order to minimize the amount withdrawn from her IRA, you will want the QCD to count toward the RMD so, if possible, do it before the RMD is complete. (you could also do it after the RMD is complete but then you will have withdrawn the RMD + the QCD ........more than the RMD). In prior yrs, I have sent Schwab a letter of instructions detailing the organizations
and the amounts to be given to each and , of course, the personal info, acct. no. and where to send the checks. It usually takes a wk or two to get the checks. I then mail the checks myself.
In order to be counted for this yr QCD, it would be nice (not sure if absolutely necessary since the withdrawal was already made this yr) to have the charities receive them this yr and give you a receipt reflecting a gift for this yr. I make the request to Schwab by early November to allow time for checks to be processed , mailed & received by you , then sent and received by charity (earlier might be better?).
You also need to make sure you have cash in the IRA so sell securities in the IRA if necessary. I don't know if Schwab will sell themselves if there isn't enough cash, but if they do, they will certainly charge you for doing it.

In recent yrs., you have been able to get checks and write your own off the IRA. You still need cash in the IRA to support the checks.
Since the withdrawal from the IRA will not happen until the charity receives the check and deposits it, it is more critical that you allow time for that withdrawal to happen this yr or else the QCD won't count for this yr and you may be penalized for not taking the RMD completely.
Being able to write your own check, though, is handy if a spur-of-the-moment opportunity comes along.
Kaneohe, is Schwab pushing clients intending QCDs into the check writing program, or do they offer either choice?

Of course, the IRA owner has to handle and disperse the checks either way. However, 1099R issuance is more assured with Schwab check issuance, but the expediency of check writing puts more emphasis on when the charity actually cashes the checks. I don't know if Schwab or any other custodian offering check writing is willing to issue a 1099R based on client's assurance of check issue or if they all wait until the check is presented for payment.

Since Schwab offers both, the OP should take the above into consideration as well as how many QCD checks will be written in determining the method chosen.
kaneohe
Posts: 6744
Joined: Mon Sep 22, 2008 12:38 pm

Re: QCD(qualified charitable distribution) and Schwab

Post by kaneohe »

Alan, no push from Schwab. I just had a need to send a check quickly to support granddaughter's charity jog-a-thon. I still intend to have Schwab do the bulk of the checks.
engineerartist
Posts: 48
Joined: Tue Dec 02, 2014 1:55 pm
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Re: QCD(qualified charitable distribution) and Schwab

Post by engineerartist »

LearningAlot wrote: Tue Apr 30, 2019 3:32 pm I will be assisting my mother in making a QCD from her Schwab Traditional IRA. She is 87 years old.

Before I get into it with Schwab, was wondering if anyone had experience with Schwab on this and
could share the key steps to make it happen.

Thanks in advance!
I have done this - download the "IRA RMD Request Form" pdf from the Schwab website. When you fill it out, you can specify the "Method of Distribution" to be a check payable to the charity and mailed directly to them (or yourself). Schwab does not charge for this service.

Don't forget to fill out the instructions regarding Federal and State tax withholding correctly.

As others have mentioned, make sure sufficient funds are available in the account - and if you want this to be part of her RMD, make sure to account for this.

There is no way to specify that this is a QCD to Schwab, and Schwab will not identify it as such on her 1099R. Subtract the QCD amount from the RMD amount on line 4a on her 1040 to determine line 4b (at least on the 2018 1040).
Retired - dividend growth investor
kaneohe
Posts: 6744
Joined: Mon Sep 22, 2008 12:38 pm

Re: QCD(qualified charitable distribution) and Schwab

Post by kaneohe »

good pt on the QCD reporting.........buried deep in the 1040 instructions for line 4:

"Exception 3. If all or part of the distribution
is a qualified charitable distribution
(QCD), enter the total distribution
on line 4a. If the total amount distributed
is a QCD, enter -0- on line 4b. If only
part of the distribution is a QCD, enter
the part that is not a QCD on line 4b unless
Exception 2 applies to that part. Enter
“QCD” next to line 4b."

it gets more involved if there is basis in the TIRA. That's the exception 2 mentioned above.
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