Will Vanguard/Fidelity automatically deduct QCD from RMD?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Fri Dec 29, 2017 7:09 pm

I rolled over a portion of my 401K to Vanguard and Fidelity in December, 2017 so I can make QCDs. I'm assuming that the RMD will be based on the balances in my accounts as of today as the markets are closed although technically it is 12/31/2017. I would like to start to make QCDs next week before I get too busy with other projects. As an example, I know that I have to take out the QCDs first and if I make QCDs of $5,000 and my RMD is $10,000 I will only be taxed $5,000. But if I make QCDs of $5,000 will Vanguard / Fidelity know that I only have to take out an additional RMD of $5,000?

stan1
Posts: 5547
Joined: Mon Oct 08, 2007 4:35 pm

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by stan1 » Fri Dec 29, 2017 7:12 pm

I came across a Vanguard RMD Service website a few weeks ago.
https://personal.vanguard.com/us/whatwe ... stribution

It's not clear whether the free service it is fully automated or if it involves customer service reps. Perhaps others have used it.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Fri Dec 29, 2017 7:28 pm

Thanks. I've been reading up on QCDs on both Fidelity and Vanguard. Both have websites to calculate RMDs but I'm not sure if they deduct the QCDs. In 2017, I took my RMD and an additional amount from my 401K and they underestimated my withholding. I made several estimated tax payments but as part of my second withdrawal was from a Roth portion of my 401K, I grossly overestimated the taxes and I think I'm going to get a whopping refund.

I want to take some of the QCDs early in the year as I feel a bit bad not contributing to charities from whom I have received appeals. But QCDs are much better for me than giving from my taxable account.

Northster
Posts: 117
Joined: Wed Oct 28, 2009 3:30 pm

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Northster » Fri Dec 29, 2017 7:36 pm

In conversation with Vanguard I was told that they had to execute the QCD after a phone call from me, and that they would adjust the RMD at that time. In the end I chose a DAF instead, at least for now.

Alan S.
Posts: 7558
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Alan S. » Fri Dec 29, 2017 7:37 pm

An IRA custodian only knows the RMD for accounts that they held on the prior 12/31. They will treat QCDs from these accounts as satisfying the RMD unless the RMD has already been completed.

BUT be very careful if you have any other IRA accounts.

Any distributions from the account with the RMD service including QCDs may or may not apply to the total RMD because an IRA custodian has no way of knowing how many other TIRA accounts you may own, the balance and RMD for those accounts, or the amount and date you might have taken a distribution from the other accounts which under the RMD aggregation rules would count toward the total RMD for all your accounts.

Therefore, you should not use an RMD service for an IRA unless it is the only IRA you have OR you set things up to not take any distributions from the account without the service until after all distributions have been completed from the IRA account with the service.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Fri Dec 29, 2017 7:51 pm

Thank you for the replies. I intend to treat my IRAs at Vanguard and Fidelity separately and take QCDs and RMDs from both as it they were separate entities. I guess I will also have to do my own calculations with help from my accountant! This is my first year of retirement and I'm also having problems calculating with holdings from my two pensions and Social Security. Oh well, I guess I can enjoy my refund this year!

User avatar
celia
Posts: 7835
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by celia » Fri Dec 29, 2017 7:53 pm

For a QCD, you need to call them up and tell them the name(s) of the qualified charities, I believe, so they know who to make the checks out to. They will mail the checks to you so you will see that everything is right, but it is up to you to give them to the qualified charity and get an acknowledgement from the charities for your tax records.

Don't set up automatic RMDs since that will be withdrawn regardless if you are making QCDs or not. QCDs don't "fit in" with the automatic withdrawal process.

And if you want QCDs to be withdrawn from part of your RMDs, you need to request the QCDs before you have withdrawn all of the RMDs for all your tIRAs for each year. By definition, the RMDs are the first dollars withdrawn each year until the RMD dollar amount is met. For example, if your RMD is $10K and you want a $6K QCD, you can do any of these withdrawal patterns:
$4K RMD
$6K QCD
or
$6K QCD
$4K RMD
or
$2K RMD
$2K QCD
$2K RMD
$2K QCD
$2K QCD

But if any QCDs are withdrawn past the $10K point, they are valid but won't impact the RMDs you have already taken.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Fri Dec 29, 2017 8:58 pm

celia wrote:
Fri Dec 29, 2017 7:53 pm
For a QCD, you need to call them up and tell them the name(s) of the qualified charities, I believe, so they know who to make the checks out to. They will mail the checks to you so you will see that everything is right, but it is up to you to give them to the qualified charity and get an acknowledgement from the charities for your tax records.

Don't set up automatic RMDs since that will be withdrawn regardless if you are making QCDs or not. QCDs don't "fit in" with the automatic withdrawal process.

And if you want QCDs to be withdrawn from part of your RMDs, you need to request the QCDs before you have withdrawn all of the RMDs for all your tIRAs for each year. By definition, the RMDs are the first dollars withdrawn each year until the RMD dollar amount is met. For example, if your RMD is $10K and you want a $6K QCD, you can do any of these withdrawal patterns:
$4K RMD
$6K QCD
or
$6K QCD
$4K RMD
or
$2K RMD
$2K QCD
$2K RMD
$2K QCD
$2K QCD

But if any QCDs are withdrawn past the $10K point, they are valid but won't impact the RMDs you have already taken.
Thank Celia for explaining it so clearly.

Lynette

tomd37
Posts: 2770
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by tomd37 » Fri Dec 29, 2017 9:07 pm

Lynette - Just want to check with you. Will you have reached the age of 70.5 on or before the date you execute your QCDs? You have to meet that requirement to make those QCDs not taxable.
Tom D.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Fri Dec 29, 2017 11:02 pm

tomd37 wrote:
Fri Dec 29, 2017 9:07 pm
Lynette - Just want to check with you. Will you have reached the age of 70.5 on or before the date you execute your QCDs? You have to meet that requirement to make those QCDs not taxable.
Hi Tom,

Thanks for being concerned that I'm not 70 1/2. Actually I'm 74 and fortunately in good health. I worked until the end of 12/31/2016 and did not have to take RMDs as my 401K was with my employer. 2017 was the first year I had to take RMDs and I took out enough but paid far too much estimated tax. I rolled over my 401K in December so that I can take QCDs in 2018. It's taken me far longer than I anticipated to figure out my finances in retirement.

Thanks,

Lynette

tomd37
Posts: 2770
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by tomd37 » Fri Dec 29, 2017 11:45 pm

Lynette - Being in our early 80's and having been involved with RMDs for the past ten to twelve years, we usually take our one-time annual RMD somewhere in the early October time frame. Our first step is to determine how much we are going to give to charity via the QCDs and then contact our Vanguard rep to set up a telephone call appointment. I send him an email ahead of that call listing the recipients name and amount so that he has that list in hand when we talk. He goes through his "required wording" with me and makes the distribution from the defined account. I usually receive the checks within about three days at home. I then send them to the recipient agencies under a "in memory of" cover letter.

My next step is to take the remaining amount of our RMD. I have already figured out how much (by percentage) I need to have withheld from that RMD for federal tax so that it and the withholdings from my pension and our social security incomes come very close to our tax liability. This does away with all federal quarterly estimated tax payments. With the recent increasing number of fraudulent tax return submissions I try to have it so that I owe something less than two hundred dollars each year. That way if there was a fraudulent submission of a return using one of our SS numbers we are not hung up waiting for our refund, but rather owe something that will allow the processing of our return immediately.
Tom D.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Sat Dec 30, 2017 4:26 am

tomd37 wrote:
Fri Dec 29, 2017 11:45 pm
Lynette - Being in our early 80's and having been involved with RMDs for the past ten to twelve years, we usually take our one-time annual RMD somewhere in the early October time frame. Our first step is to determine how much we are going to give to charity via the QCDs and then contact our Vanguard rep to set up a telephone call appointment. I send him an email ahead of that call listing the recipients name and amount so that he has that list in hand when we talk. He goes through his "required wording" with me and makes the distribution from the defined account. I usually receive the checks within about three days at home. I then send them to the recipient agencies under a "in memory of" cover letter.

My next step is to take the remaining amount of our RMD. I have already figured out how much (by percentage) I need to have withheld from that RMD for federal tax so that it and the withholdings from my pension and our social security incomes come very close to our tax liability. This does away with all federal quarterly estimated tax payments. With the recent increasing number of fraudulent tax return submissions I try to have it so that I owe something less than two hundred dollars each year. That way if there was a fraudulent submission of a return using one of our SS numbers we are not hung up waiting for our refund, but rather owe something that will allow the processing of our return immediately.
Thank you Tom. I have been reading threads from the Boglehead archives on the mechanisms of making the QCDs and what evidence one needs to provide to the IRS. One of the charities to whom I want to make a QCD is my church. I was told that they are used to receiving QCDs directly from an institution and they would provide me with a receipt. I see no problem with this organization and another charity where I know people personally. Another organization is a national charity. I'll send them a smaller check first and see how this works.

I have decided that I will make the QCDs from my Fidelity account as they have two offices three miles from me. I will probably have to give in and work with a dedicated rep as I've found that as a walk-in customer I don't always get a knowledgeable person. I've seen from other threads that one can possibly have check writing privileges on an IRA. I'm not interested in that. As I plan to start the process next week, I should have time to sort it out by December, 2018!

Thanks,

Lynette

User avatar
dodecahedron
Posts: 3584
Joined: Tue Nov 12, 2013 12:28 pm

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by dodecahedron » Sat Dec 30, 2017 5:02 am

Lynette wrote:
Sat Dec 30, 2017 4:26 am
I've seen from other threads that one can possibly have check writing privileges on an IRA. I'm not interested in that.
I am wondering why not? It seems to me like the easiest way to deal with the QCD issue. Just write checks to your charities of choice. It is what I am hoping to be able to do once I reach 70 1/2 (six years to go!)

Almost there
Posts: 805
Joined: Thu Jan 03, 2008 7:06 pm
Location: Arizona USA

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Almost there » Wed Jun 13, 2018 6:41 pm

TomD37 wrote:
Being in our early 80's and having been involved with RMDs for the past ten to twelve years, we usually take our one-time annual RMD somewhere in the early October time frame. Our first step is to determine how much we are going to give to charity via the QCDs and then contact our Vanguard rep to set up a telephone call appointment. I send him an email ahead of that call listing the recipients name and amount so that he has that list in hand when we talk. He goes through his "required wording" with me and makes the distribution from the defined account. I usually receive the checks within about three days at home.
Thank you TomD37 for indicating your process with Vanguard with regard to QCD and RMDs. I had a Vanguard rep for many years, however, she retired and am not sure how to find a new one. So you do the QCD first and then the RMD. Do you get it done all at the same time?

Almost there

tomd37
Posts: 2770
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by tomd37 » Wed Jun 13, 2018 6:52 pm

Almost there,
I believe you can find the name of your Vanguard representative on your financial statement, either online or the paper copy if you receive that. I do the QCD around September and then the remaining RMD not later than early November. Doing the QCD in September gives me at least three months to ensure that I receive the proper contribution acknowledgment letter from the charity before year end. Don't forget that the QCD reduces the taxable income that is reported on line 15b of the IRS Form 1040.
Tom D.

fourwheelcycle
Posts: 390
Joined: Sun May 25, 2014 5:55 pm

Post by fourwheelcycle » Wed Jun 13, 2018 8:53 pm

dodecahedron wrote:
Sat Dec 30, 2017 5:02 am
Lynette wrote:
Sat Dec 30, 2017 4:26 am
I've seen from other threads that one can possibly have check writing privileges on an IRA. I'm not interested in that.
I am wondering why not? It seems to me like the easiest way to deal with the QCD issue. Just write checks to your charities of choice. It is what I am hoping to be able to do once I reach 70 1/2 (six years to go!)
I agree with dodecahedron that writing my own QCD checks seems like an easy way to bypass formal procedures with my IRA custodian - Vanguard in my case. However, I will not be turning 70 1/2 until early December, 2018 and it is very important that Vanguard reports the IRA withdrawals associated with my QCDs as having occurred before the end of 2018. My understanding is that if I write my own QCD checks Vanguard will report the IRA withdrawals as occurring on the day the checks actually clear my IRA account, whereas if I submit my charity names and amounts to Vanguard they will report the IRA withdrawals as occurring on the day Vanguard cuts the checks and mails them to me.

Even if I write, scan, and mail my own QCD checks in early December, it is likely they will not clear my IRA account until sometime in 2019. For this reason, although I may want to set up IRA check writing for 2019 and subsequent years, for 2018 I want to formally request my QCD checks from Vanguard on the day I turn 70 1/2, so I can be sure my IRA withdrawals will be reported for the 2018 tax year.

User avatar
dual
Posts: 491
Joined: Mon Feb 26, 2007 7:02 pm

Re:

Post by dual » Thu Jun 14, 2018 2:12 am

fourwheelcycle wrote:
Wed Jun 13, 2018 8:53 pm
in my case. However, I will not be turning 70 1/2 until early December, 2018 and it is very important that Vanguard reports the IRA withdrawals associated with my QCDs as having occurred before the end of 2018.
According to the IRS: https://www.irs.gov/retirement-plans/pl ... tions-rmds
The first year following the year you reach age 70½ you will generally have two required distribution dates: an April 1 withdrawal (for the year you turn 70½), and an additional withdrawal by December 31 (for the year following the year you turn 70½). To avoid having both of these amounts included in your income for the same year, you can make your first withdrawal by December 31 of the year you turn 70½ instead of waiting until April 1 of the following year.
The way I read that you can make a withdrawal any time during the year you turn 70 1/2. You do not have to wait until your birthday+6 months. So you can make your withdrawal now and it will count towards your first RMD that is required for 2018.

The IRS site gives the following example to determine the year when you have to make your first RMD but does not say you have to wait until the birthday plus 6 months to make a withdrawal. It would be impossible to make a withdrawal on the birthday plus 6 months date with a June 30 birthday if Dec. 30 fell on a weekend.
Example: You are retired and your 70th birthday was June 30, 2013. You reached age 70½ on December 30, 2013. You must take your first RMD (for 2013) by April 1, 2014.

fourwheelcycle
Posts: 390
Joined: Sun May 25, 2014 5:55 pm

Re: Re:

Post by fourwheelcycle » Thu Jun 14, 2018 6:58 am

dual wrote:
Thu Jun 14, 2018 2:12 am
The way I read that you can make a withdrawal any time during the year you turn 70 1/2. You do not have to wait until your birthday+6 months. So you can make your withdrawal now and it will count towards your first RMD that is required for 2018.
I was commenting about making successful QCDs, not RMDs. If I am wrong about the timing for QCDs I hope someone will correct me.

Lynette
Posts: 1701
Joined: Sun Jul 27, 2014 9:47 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Lynette » Thu Jun 14, 2018 7:14 am

Good Morning, This is an old thread that was revived and there have been many other threads on RMDs and QCDs. This year I requested both Vanguard and Fidelity to send me checks for QCDs early in the year. I mailed them to the charities and asked for verification that the money had been received. Then I took the balance of the RMDs. Both Vanguard and Fidelity have services that will do the RMDs. I prefer to do this early and get it over. On both the Vanguard and Fidelity sites, it shows the amount of RMDs that had to be taken, were taken and now the balance for RMDs to be taken is 0.

There are also a large number of threads on writing checks for RMDs. I do not have check-writing privileges on my IRA or other accounts and I do not see the need for it given the limited number of checks I write. There is a $250 minimum of checks on Vanguard if I recall correctly. I do most of my finances online and only need checks for small-time contractors such as a lawn service or my handyman. So it was easier for me to have Vanguard and Fidelity send me the checks. I also like to have the proof from them that the checks for the QCD were sent to X charity. This is just me. Obviously everyone's financial situation is different.

User avatar
1210sda
Posts: 1371
Joined: Wed Feb 28, 2007 8:31 am

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by 1210sda » Thu Jun 14, 2018 7:52 am

Not too long agom making a QCD required calling Vanguard and having the rep create it.

Now, (not sue when it started), I can do it online.

In the "2. Where is the money going?" section, click on "Send me a check" and a box appears asking if this is a QCD.

When you click on that, you are able to type in the charity name.

1210

Almost there
Posts: 805
Joined: Thu Jan 03, 2008 7:06 pm
Location: Arizona USA

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Almost there » Thu Jun 14, 2018 1:24 pm

TomD37 wrote:
Almost there,
I believe you can find the name of your Vanguard representative on your financial statement, either online or the paper copy if you receive that. I do the QCD around September and then the remaining RMD not later than early November. Doing the QCD in September gives me at least three months to ensure that I receive the proper contribution acknowledgment letter from the charity before year end. Don't forget that the QCD reduces the taxable income that is reported on line 15b of the IRS Form 1040.
Thank you for the timely info. I checked my Vanguard statements and no rep's name is indicated. Will call them later on.
Thanks for the 'heads up' to start the QCD early. I will be 70.5 mid October and will initiate it then.

Then end of November I will start my RMD. Based on what I have read, the QCD becomes part of the whole RMD withdrawal. Will my 1099 indicate the amount of the QCD? As to doing my 2018 taxes (looking ahead!), is there a question within the H&R Block software with regard to QCD so it is reported on line 15b of the 1040?

Almost there

tomd37
Posts: 2770
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by tomd37 » Thu Jun 14, 2018 1:38 pm

Almost there,
Definitely do not do a QCD any earlier than the day you attain age 70.5, preferably after that date. A QCD is part of the RMD but the Form 1099-R does not differentiate between the two. It will report the total distribution for a given year and it is incumbent upon the taxpayer to make the correct entry on lines 15a and 15b of the Form 1040.

I am not familiar with the H&R Block software program but strongly suspect it asks the appropriate questions for you to distinguish a QCD for the year. I volunteer in the AARP Foundation Tax-Aide program preparing free tax returns and its program has such a tax reduction question and makes the appropriate QCD annotation preceding the line 15b entry.
Last edited by tomd37 on Thu Jun 14, 2018 2:32 pm, edited 1 time in total.
Tom D.

Almost there
Posts: 805
Joined: Thu Jan 03, 2008 7:06 pm
Location: Arizona USA

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Almost there » Thu Jun 14, 2018 2:03 pm

Thanks for the reminder about the QCD. Yes I remember reading that for the first QCD one had to be at least 70.5 years old.

Thank you too for being an AARP tax aide. Will be sure to pay attention while doing my next Income Tax Return next year with regard to my RMD and QCD.

Almost there

User avatar
dual
Posts: 491
Joined: Mon Feb 26, 2007 7:02 pm

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by dual » Thu Jun 14, 2018 7:15 pm

tomd37 wrote:
Thu Jun 14, 2018 1:38 pm
Definitely do not do a QCD any earlier than the day you attain age 70.5, preferably after that date.
Under the QCD rules, the IRA owner must be at least age 70 ½ to do the QCD to the charity (and notably, the IRA owner must actually be age 70 ½ or older on the date of distribution, not merely turning 70 ½ sometime that year).
https://www.kitces.com/blog/qualified-c ... uirements/

Wow. So if you were born on June 30, 1947 you are SOL on doing a QCD for the first year since you turned 70 1/2 on Dec. 30, 2017, which is a Saturday?

What counts as the date of the QCD? The date of the check? The date it is delivered to the charity? The date the charity deposits to their account? The date the money is withdrawn for your IRA?

Alan S.
Posts: 7558
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by Alan S. » Thu Jun 14, 2018 8:29 pm

The date of the QCD is the date the check is mailed from the IRA custodian in order to conform to 1099R reporting requirements. Mailing is the actual date of distribution. Depending on the procedures of the custodian and weekend/holiday considerations, the mailing date might be up to 3 or 4 days after the date on the check. However, if the custodian assures you that the check will be reported on the expiring year 1099R, you will be OK.

However, with the growing use of IRA owner check writing an entire different set of considerations apply. Lacking some special custodian procedures, the custodian will not know when you mailed your self executed IRA check and 1099R reporting will be triggered on the date the check clears the custodian's bank.

As for receipt by the charity, there is no specific guidance, but it is expected that you can use the constructive receipt rules which is the date you mail the check to the charity.

Therefore, in the first RMD year and 70 1/2 occurring late in December, timing is very dicey. While the RMD can be deferred to the following year up to 4/1 to avoid the date crunch, since the QCD will not be in your AGI anyway, the only fallout for doing that is that your year end balance and therefore the second year RMD will be around 3.7% higher since your 12/31 balance to determine the year 2 RMD will not have been reduced by the year 1 RMD. Since the 100k QCD limit applies to QCDs done in a single year, if you defer the first year RMD the limit will effectively apply to your first two QCDs combined since 2 years worth will likely be done in the second RMD year.

If your QCD will be less than your RMD, you can still distribute the non QCD portion in the first year if you want to.

blgaarder
Posts: 43
Joined: Wed Mar 11, 2015 4:33 pm

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by blgaarder » Fri Jun 15, 2018 2:27 pm

celia wrote:
Fri Dec 29, 2017 7:53 pm
For a QCD, you need to call them up and tell them the name(s) of the qualified charities, I believe, so they know who to make the checks out to. They will mail the checks to you so you will see that everything is right, but it is up to you to give them to the qualified charity and get an acknowledgement from the charities for your tax records.

Don't set up automatic RMDs since that will be withdrawn regardless if you are making QCDs or not. QCDs don't "fit in" with the automatic withdrawal process.

And if you want QCDs to be withdrawn from part of your RMDs, you need to request the QCDs before you have withdrawn all of the RMDs for all your tIRAs for each year. By definition, the RMDs are the first dollars withdrawn each year until the RMD dollar amount is met. For example, if your RMD is $10K and you want a $6K QCD, you can do any of these withdrawal patterns:
$4K RMD
$6K QCD
or
$6K QCD
$4K RMD
or
$2K RMD
$2K QCD
$2K RMD
$2K QCD
$2K QCD

But if any QCDs are withdrawn past the $10K point, they are valid but won't impact the RMDs you have already taken.
I thought that you had to withdraw the QCD before making any RMD withdrawal:

$6K QCD
$4K RMD

Am I mistaken?

Thanks

sport
Posts: 6843
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by sport » Fri Jun 15, 2018 2:35 pm

blgaarder wrote:
Fri Jun 15, 2018 2:27 pm
I thought that you had to withdraw the QCD before making any RMD withdrawal
No. The first withdrawals from your account must be part or all of your RMD. Those withdrawals can be QCDs or ordinary withdrawals. If you want your QCD to be part of your RMD, you must make the QCD before you have completed your RMD. Once you have completed your RMD, you can continue to make QCDs if you wish, up to the maximum yearly limit of 100k. Those QCDs, however, will not reduce the taxability of your RMD for that year. They will reduce the amount of the RMD for the next year because your IRA balance will be less.

User avatar
celia
Posts: 7835
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Will Vanguard/Fidelity automatically deduct QCD from RMD?

Post by celia » Fri Jun 15, 2018 7:42 pm

blgaarder wrote:
Fri Jun 15, 2018 2:27 pm
I thought that you had to withdraw the QCD before making any RMD withdrawal:

$6K QCD
$4K RMD

Am I mistaken?
By definition, the RMDs are the amount that is REQUIRED to be withdrawn each year. It cannot be converted. It is also the first dollars that are withdrawn each year.

By definition, QCDs are the money that is given directly to charity and is not taxable to you. You can take them as part of your RMD or later (or even partly as the RMD and partly not). But if you take them AFTER your RMD has been removed, then you are taking out RMD+QCD (more than is required).

Post Reply