Question on RMDs

[Bigdawg]

Simple. It's one per year, starting in the year you turn 70.5. It's that simple in most cases.

I'll be 70 1/2 in April 2036 (God willing). So that will be the first year I am required to take an RMD. I don't have to take another one in 2036 even though I'd turn 71 later that year. One per year starting with the year in which you turn 70 1/2. That said, we will probably be taking distributions from it before then, but you never know.

Just noticed we were born in the same month and year. Are you still a Libra? (Zodiac Signs NASA Changes Horoscope Dates New Ophiuchus). Apparently I am now a Virgo.

 

[Souschef]

The standard deduction right now is over $15 K for MFJ over 65. We have no debt, so no interest deduction. property tax low, so there is no way I can hit that. The QCD is a perfect way to reduce your AGI.
The one caveat is that the check drawn on the institution must be made out to the charitable institution.

 

[WeedWatcher]

Thanks to everyone for responses. My eyes glaze over at official "governmentese" and hearing things in other words helps.

 

[misanman]

Another potential idea: use the QCD to lower income for purposes of the Social Security Benefits Worksheet, thus potentially lowering the amount of Social Security benefits that would be taxed.

I quickly checked last year's tax forms and it seems like it could work. Has anyone out there used this approach?

 

[nwsteve]

The standard deduction right now is over $15 K for MFJ over 65. We have no debt, so no interest deduction. property tax low, so there is no way I can hit that. The QCD is a perfect way to reduce your AGI.
The one caveat is that the check drawn on the institution must be made out to the charitable institution.

Actually, the stretch to make 15k may not be as tough as you think. I was surprised to see how much medical insurance (medicare Plan B,Plan F and D premiums, out-of-pocket medical, dental, eye and misc add up. (yes, you do have to make an income test, so only deduct portion over 7.5% of income). Throw in some charitable deductions, state income or sales taxes and presto you are over 15K.
I had periodontal work and wife had implant one year that quickly pushed us o over the threshold.
Nwsteve

 

[Souschef]

Another potential idea: use the QCD to lower income for purposes of the Social Security Benefits Worksheet, thus potentially lowering the amount of Social Security benefits that would be taxed.

I quickly checked last year's tax forms and it seems like it could work. Has anyone out there used this approach?

I tried doing that using Turbotax, but even increasing my QCD by 30K did not impact the SS amount. Of course. it did decrease by tax obligation.

 

[mamadogmamacat]

thanks, all, for the good info..will file away for when i actually start taking distributions in approx 4 yrs...of course rules may change somewhat by then, who knows.still expect there will continue to be advantages to making charitable contributions out of tax deferred accounts. Always good to gather info from this great community, and learn from those already in a position to do something that I am considering

 

[misanman]

It looks like I've found another reason to do QCD next year -

Our state income tax is based on AGI with some adjustments that don't include deductions. So a charitable deduction doesn't affect the tax computation but a reduction to AGI via a QCD would result in a lower state income tax computation. Although QCD won't reduce our deductible expenses to below the standard deduction, this state tax gambit seems worth while doing.

 

[kaneohe]

That's right. Not deductible, but the advantage to a QCD is that it won't add to your AGI. IRS Pub 590-B has the details.
You must also file Form 8606, Nondeductible IRAs, if:
you made the qualified charitable distribution from a traditional IRA in which you had basis and received a distribution from the IRA during the same year, other than the qualified charitable distribution; or
the qualified charitable distribution was made from a Roth IRA.

If you file F8606 because you had basis, be sure you read the instructions on the form itself and also the instructions for the form (separate) and follow them. When you do a QCD, it comes only from the deductible part of the IRA which preserves the basis for your other taxable distributions from the IRA.