Originally Posted by yakers
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.
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.