Qualified Charitable Distributions from an IRA Checkbook
Does not IRC § 408(d)(8)(B)(i) require the IRA custodian to effect a transfer of RMD to the charity in order to qualify for the Qualified Charitable Distribution? Meaning the IRA owner cannot use a checkbook to write a check for the RMD to the charity
Permalink Submitted by Alan - IRA critic on Thu, 2018-12-06 00:27
Q&A 41 of Notice 2007-7 states that an IRA check written by the IRA owner is considered to be issued by the custodian, therefore a QCD can be made using IRA check writing. However, one issue here is that the IRA custodian does not know a distribution was made until the check is returned, so if the charity does not cash the check before year end, a 1099R might not include the amount of the check. That could lead to an RMD shortfall. Therefore, an IRA owner with check writing should make sure the check is written early enough, and should get the charity’s agreement to deposit the check promptly. Note that Schwab is not encouraging QCDs via check writing, and I think Vanguard offers this as well.