QCD Question
Let me start by saying that I understand that due to the Cares Act the 2020 RMD is not required!
Question, if a client wishes to make a charitable contribution for 2020 from her IRA that is an amount that is less than what her 2020 RMD would have been does she still receive the same tax favorable benefit for doing so?
Permalink Submitted by Alan - IRA critic on Thu, 2020-10-08 19:08
No. While the QCD will still be non taxable and it will slightly reduce the IRA value and future RMDs, it will not reduce the taxes on a required distribution nor will it reduce 2020 taxes. It’s October and only 3 months until the client can make a QCD that WILL reduce taxes on her 2021 RMD. So if client is looking for tax benefits, she should wait and make the QCD in 2021, possibly in addition to the 2021 QCD, effectively doubling up the QCDs and making them in 2021. That way the charity receives what they would have for the two years, and the total QCDs made will reduce the taxes on the 2021 RMD. Also, it is very likely the charity will need the donation more in 2021 than they do now due to the cumulative drain on their resources from the effects of Covid.