QCDS AND 60-DAY ROLLOVERS: TODAY'S SLOTT REPORT MAILBAG

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on Twitter: @theslottreport

Question:

I am confused regarding the requirements for making a qualified charitable distribution. Is it necessary for the donation to be sent directly from the financial company to the charity, or can the check be made out to the charity but sent to me and then sent to the charity?

Thank you,

John

Answer:

Hi John,

We get a lot of questions about the mechanics of doing a qualified charitable distribution (QCD) correctly. The rules require a direct transfer from your IRA to the charity. Either of the methods you describe would satisfy this requirement. What would not work would be having the check be made payable to you and then your giving the funds to the charity.

Question:

Hi Ed,

Very much appreciate all you and your team do. My question is as follows:

Client aged 78, took full $25,000 RMD in November 2022 from his IRA. The custodian mistakenly sent him an extra $10,000 on the last day of the year from the same IRA. Can we do a 60-day rollover and roll the $10,000 back into the IRA before we take the RMD in 2023? Or, will he need to first take this year’s RMD before he can roll it back into the IRA? Or, does neither option work?

Thanks

Answer:

Your client does have the opportunity to do a 60-day rollover. The $10,000 is not part of the 2022 RMD so it would be rollover eligible as long as all the other requirements for a rollover are met, such as the 60-day deadline and no other rollovers within the last 356 days.

The rollover can be done before the RMD for 2023 is taken. The first money out of an IRA during the year is considered an RMD (the “first-money-out” rule.) The $10,000 would be a rollover deposit and not a distribution, so that rule would not apply in your situation. There have not been any distributions in 2023 yet. Just be sure to add the $10,000 that was outstanding at year end to the balance used to calculate the 2023 RMD.

https://www.irahelp.com/slottreport/qcds-and-60-day-rollovers-todays-slott-report-mailbag

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy