QCD WITH COUPLES- CAN EACH MAX OUT THEIR OWN?

My client’s are couples with hefty IRA plans. Husband will have RMD in the amount of $120,000 first year.
Wife starts her RMD amount at $52,000 . So, can husband do a QCD for $100,000 and wife max out her QCD at $52,000?
Or, is the QCD limit the couple to $100,000? I cannot think of any other way of not getting out of paying taxes on their RMD.
Can you?



The $100,000 annual QCD limit is per individual, so husband can do up to a $100,000 QCD and wife can also do up to a $100,000 QCD.  QCDs are not limited to the amount of the RMD.



The limit is 100k per taxpayer, so together they can exceed 100k each year. But be sure they know that they cannot do a QCD until they reach 70.5 to the day. They also need to be sure the QCD is the first distribution each year, since distributions taken prior to the QCD cannot offset the RMD.  Note that the QCD will still cost them much more than the taxes would have unless they were going to donate irrespective of taxes.



I have a client who is monthly sending directly $500 a month to her Church as QCD and also withdrawing$ 1000 as a distribution to her.  She did not want to send the church a lump sum at the end of the year.In total she is meeting her RMDs by end of the year.  The 1099R reflects total RMD required.  Is this wrong of her to do this?  



If you mean that she withdraws 1000 per month for her plus 500 as a QCD, then her total RMD is 18000 and the 1099R would indicate 18000. But she can report 6000 of that as a QCD, leaving taxable income of 12000.  Based on these numbers, she is fine as long as she was over 70.5 for the entire year. 



With the changes in federal tax law last year and fewer senior people being able to itemize deductions on their federal tax return, as a counselor in the AARP Foundation Tax-Aide program I am ensuring my clients are aware of the QCD program.  Per my senior leadership, we cannot give financial advice directly, but we can make them aware of the program, its possible effects on their federal taxable income, and suggest they contact their financial adviser if they feel they may want to reduce their taxable income by the amount of their QCD.  I assisted in the development of a one-page handout to give them explaining the program in limited terms.  Tom D.



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