By Sarah Brenner, JD
IRA Analyst
Question:
As year-end approaches, I have just exceeded my 2019 RMD, combining total QCD’s during the year and my regular monthly IRA withdrawals.
If I make additional charitable contributions from my IRA this month, are they still considered tax-advantaged QCD’s, or has my QCD opportunity ended because I’ve already exceeded the annual RMD?
Answer:
This is an area where there is a lot of confusion! While you can use a qualified charitable distribution (QCD) to count toward your required minimum distribution (RMD), your QCDs for the year are not limited to the amount of your RMD. Instead, the QCD limit for all those eligible is $100,000 annually. This is true even if your RMD is a smaller amount.
Question:
My client just died at age 54 with a $550,000 IRA. Her husband is beneficiary of the IRA and he is 72. He is currently taking RMDs from his own IRA.
He does not want to take RMDs from his wife’s IRA account. By rolling over his wife’s IRA to an inherited spousal IRA, will he be the owner of the IRA-BDA account or is he just the beneficiary? According to IRS Publication 590B, he cannot be the IRA owner for the purpose of delaying the RMD on his wife’s IRA account. Does the inherited IRA ownership belong to the decedent, and the surviving spouse is just the beneficiary?
Thank you for the clarification. I am just trying to set up the proper account ownership to avoid RMDs until the decedent would have reached age 70 ½.
Raymond
Answer:
Hi Raymond,
While many spouse beneficiaries choose to do a spousal rollover, treating an IRA inherited from their deceased spouse as their own and titling it in their name, that is not the only option available. A spouse beneficiary can also choose to keep the IRA as an inherited IRA. That might be a good option in this case. By keeping the account as an inherited IRA, the husband can avoid taking required minimum distributions (RMDs) on his deceased wife’s funds until she would have been age 70 ½. That would not be for another 16 or so years down the road. On the other hand, if the husband does a spousal rollover, RMDs on the wife’s funds would need to start right away because he is older than age 70 ½.
https://www.irahelp.com/slottreport/qcds-and-inherited-iras-todays-slott-report-mailbag
