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Qualified Charitable Distribution Questions
Old 12-31-2017, 08:45 PM   #1
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Qualified Charitable Distribution Questions

DW will be 70 (and70.5) in 2018. We were planning to start monthly RMDs from Vanguard account at the beginning of the year. Now we are considering Qualified Charitable Distributions. AFAIK the donation cannot be made until she is actually 70.5 (later in the year). Also AFAIK more than the RMD can be donated. Is this correct? Anyone doing this through Vanguard or another custodian? Is it as simple as it sounds?
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Old 12-31-2017, 09:17 PM   #2
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Originally Posted by yakers View Post
DW will be 70 (and70.5) in 2018. We were planning to start monthly RMDs from Vanguard account at the beginning of the year. Now we are considering Qualified Charitable Distributions. AFAIK the donation cannot be made until she is actually 70.5 (later in the year). Also AFAIK more than the RMD can be donated. Is this correct? Anyone doing this through Vanguard or another custodian? Is it as simple as it sounds?
That is correct. The QCD limit is $100,000.

From Investopedia:

Any traditional IRA owner or beneficiary who is at least 70.5 years old can use the QCD rule to exempt their required minimum distributions from taxation. The age limit here applies literally to the exact date on which the IRA owner turns age 70.5; the QCD cannot simply happen in the year that the taxpayer turns this age. For example, if an IRA owner turns 70 on February 15, then he or she cannot make a QCD until August 15.

One of the biggest advantages that the QCD rule provides is the ability for taxpayers to lower their adjusted gross incomes. This is much more valuable than taking an itemized deduction, which merely lowers taxable income. Because the AGI number is the one used for many tax calculations, having a lower number can allow the donor to stay in a lower tax bracket, reduce or eliminate the taxation of Social Security or other income and remain eligible for deductions and credits that might be lost if the taxpayer had to declare the RMD amount as income.


Another key advantage is that the donor does not have to itemize deductions in order to qualify for this deduction since the exclusion applies to adjusted gross income and not taxable income. This ultimately lowers the real cost of the donation for the donor, because having a lower AGI is more effective in some ways than merely having a lower taxable income.


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Old 12-31-2017, 09:19 PM   #3
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Sounds like have it down........very important as you said, be sure you are 70.5 y.o. when you take the QCD distribution. Maybe wait 1 more day just to be sure. You can give up to 100K/ yr. If you want to take no more than the RMD amount for both RMD and QCD combined, be sure you take the QCD sometime before the RMD is met (from both RMD/QCD.)......both RMD/QCD satisfy the RMD requirement..........but if you take the full RMD before you start taking QCDs, you will have withdrawn more than needed to satisfy RMD.

With my broker, I just send in a letter listing the charity names/amounts and the broker prepares the checks and sends them to me. With Vanguard, I have read stories that you have to be on the phone while they prepare and check the checks. I guess they can't trust themselves so they want you as a participant to approve what is done. If you have a number of these, it can take up to an hr on the phone. Supposedly the process is supposed to be improved in the future.
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Old 12-31-2017, 10:44 PM   #4
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Any traditional IRA owner or beneficiary who is at least 70.5 years old can use the QCD rule to exempt their required minimum distributions from taxation. The age limit here applies literally to the exact date on which the IRA owner turns age 70.5; the QCD cannot simply happen in the year that the taxpayer turns this age. For example, if an IRA owner turns 70 on February 15, then he or she cannot make a QCD until August 15.
So if you are born Aug 1 you have to wait til the following year to make a QCD...in essence losing one year?
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Old 01-01-2018, 07:57 AM   #5
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So if you are born Aug 1 you have to wait til the following year to make a QCD...in essence losing one year?
Yes , you have to wait till you are 70.5. Whether you are losing a yr or not is in your mind for you to decide. You don't have to take RMDs until the yr you are 70.5 so the QCD and RMD are tied together.
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