Qualified Charitable Distribution

I have a client who is a %5 owner and will have a $49,000 RMD from his 401(k) in 2021. Can he set up a Rollover IRA and distribute $100,000 from the 401(k) to the Rollover IRA and then do a QCD for the $49,000?



This will not work for 2021 if therer was no prior IRA balance. SInce 2021 is an RMD distribution year for the 401k, the first 49,000 distributed from the 401k is an RMD and not eligible for rollover. Therefore, only 51,000 is allowed to be rolled to the IRA, and while a QCD could be done from the IRA, there was no IRA RMD to reduce, and he would still have a total RMD of 49,000 as taxable income. This would begin to help starting in 2022, but not in 2021.



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