QCD from an inherited IRA RMD prior to reaching 70 1/2

Greatsail

Confused about dryer sheets
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I have several inherited IRA’s that have RMD’s and I would like donate the distribution and use them as a Qualified Charitable Distribution , but I haven’t reached the age of 70 1/2. We use the standard deductions on our taxes, so itemizing isn’t an option.
Is there any other option to avoid the tax implications of these RMD’s and donate the entire distribution?
Thanks
 
There's no avoidance except by disclaiming the IRAs, which I think it's too late to do if your name is now on them.
 
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The only idea I can think of, and it may only be partially helpful:

Bunch your itemized deductions. Take your RMD in late December of one year, then take the RMD in early January the next year, and make two years worth of charitable deductions in February.

Bunching deductions can help you get over the standard deduction in alternate years, and you can just take the standard deduction in the other years.

This strategy used to work better when the standard deduction was lower (2016ish and before). It can still work if your charitable giving plus your other potential itemized deductions is large enough.

If you want to even out the cash flows to your charities, or if you want to bunch more than two years of deductions into a single year, you could consider donating to a DAF as an intermediary.
 
There's no avoidance except by disclaiming the IRAs, which I think it's too late to do if your name is now on them.

It would be too late to disclaim. One of the rules of disclaimers is you can't accept or receive any benefit from the asset before disclaiming.
 
Your annual distribution isn't limited to the RMD number...if you emptied the account(s) in one year, and donated it all, would you get enough tax benefit from itemizing that one year? Of course, it may not need to be an all or nothing, depending on how big the IRAs are, but you get the idea.

(I don't know the tax code for donations, but wouldn't be surprised if the IRS doesn't let you itemize 100% of donations, in which case it might not be worth it)
 
The only idea I can think of, and it may only be partially helpful:

Bunch your itemized deductions. Take your RMD in late December of one year, then take the RMD in early January the next year, and make two years worth of charitable deductions in February.

Bunching deductions can help you get over the standard deduction in alternate years, and you can just take the standard deduction in the other years.

This strategy used to work better when the standard deduction was lower (2016ish and before). It can still work if your charitable giving plus your other potential itemized deductions is large enough.

If you want to even out the cash flows to your charities, or if you want to bunch more than two years of deductions into a single year, you could consider donating to a DAF as an intermediary.
In this scenario, I don't think it matters what month you take the RMDs. The amount you have to take in each year is set on Jan 1 and will be the same whether you take it early or late in the year, so you could take your RMD every Feb and just donate two years' worth in alternate years.
 
In this scenario, I don't think it matters what month you take the RMDs. The amount you have to take in each year is set on Jan 1 and will be the same whether you take it early or late in the year, so you could take your RMD every Feb and just donate two years' worth in alternate years.

Very true. I guess I was thinking about the cash flow aspect. I run my finances with just-in-time cash flow, but I acknowledge that many folks don't.
 
Your annual distribution isn't limited to the RMD number...if you emptied the account(s) in one year, and donated it all, would you get enough tax benefit from itemizing that one year? Of course, it may not need to be an all or nothing, depending on how big the IRAs are, but you get the idea.

(I don't know the tax code for donations, but wouldn't be surprised if the IRS doesn't let you itemize 100% of donations, in which case it might not be worth it)

There are percent-of-AGI limitations for deductibility of donations. I don't know what they are offhand -- quite frankly most people are not generous enough to where it matters.

Distributing then donating a "large" amount from an IRA would do two things: it would (in most cases) give you a larger charitable deduction on Schedule A. It would also increase your taxable income. In most cases, the increase in taxable income would hurt more than the Schedule A deduction would help. The only exception I can think of is if you have such low income that you are potentially wasting non-refundable credits.

Another approach I just thought of, and it's one I'm using, is to just wait until 70.5 and then do QCDs. QCDs are probably the most tax efficient way of giving, and you can do QCDs up to $105K per year per person, and they count towards any RMD requirement. Probably 99% of folks can use QCDs to drain their tIRA in their lifetime if they really want to with zero tax impact. The only drawbacks I see are (a) you might not live to 70.5 to do them, and (b) the charities have to wait until you reach 70.5 - gifting *now* might be important to some people.
 
I have several inherited IRA’s that have RMD’s and I would like donate the distribution and use them as a Qualified Charitable Distribution , but I haven’t reached the age of 70 1/2. We use the standard deductions on our taxes, so itemizing isn’t an option.
Is there any other option to avoid the tax implications of these RMD’s and donate the entire distribution?
Thanks
I don't know the rule abt inherited CDs. I do do QCDs from my personal IRA. I do that along with the standard deduction, which I will use for 2024 taxes and probably for 2025 taxes. No idea of the increased standard deduction will be around for 2026 taxes.
 
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