Solved

Does a check from my IRA checking account to a charity meet the Pub 590-B requirement that it was "made directly by the trustee of your IRA" so it qualifies as a QCD?

Forum|Forum|7 years ago
June 4, 2019
4 replies
0 views

Under the heading "Qualified charitable distributions." IRS Publication 590-B states: "A qualified charitable distribution (QCD) is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax deductible contributions."

I want to contribute to "an organization eligible to receive tax deductible contributions". I've opened a checking account attached solely to my Vanguard IRA. Rather than asking Vanguard to send a check or shares to my chosen charity, I'd rather write a check from my IRA checking account directly to the charity. This simplifies the procedure and avoids any fees from Vanguard. Can I do this and still qualify for the QCD, so that some of my Required Minimum Distribution (RMD) from my IRA does not count as federally taxable income?

TurboTax Deluxe Windows

Best answer by Critter

Yes it should work since it will be coming directly from the IRA to the charity ... if you write the check to yourself and then write one to the charity that would not fly. Please confirm this with the IRA custodian to be sure.

CritterAnswer

Employee

Yes it should work since it will be coming directly from the IRA to the charity ... if you write the check to yourself and then write one to the charity that would not fly. Please confirm this with the IRA custodian to be sure.

B

bfamily9

Employee

I disagree with the answer. It is not going directly to the charity. It is going from your traditional IRA to you (your checking account), and then from you to the charity. IRS Pub 590-B states that it must go directly to the charity. You can have your IRA trustee send a check to your address, but the charity must be the only payee on the check.

J

JustJudy

Check out https://www.kiplinger.com/article/retirement/T054-C000-S004-ira-qcd-rules-qualified-charitable-distributions.html

Bottom line for you: "Although Vanguard offers check writing, the firm requests that you either fill out a form or call to make the transfer for the donation to count as a QCD, says spokesperson Emily Farrell. Vanguard makes the check out to the charity and sends it to you to forward." According to the article, however, Fidelity will allow you to write checks with just a couple of caveats which are easily complied with.

W

wardz1

I have an indirect answer that involves the IRS. I had been doing QCDs from my IRA via Fidelity Ira checks since they were first allowed. On my 2017 return I was audited for not reporting my RMD and asking for payment with penalties. I just sent them copies of all the IRA checks to charities that year (front and back) and they responded by canceling the assessment and penalties. Seems pretty clear that the IRA checks made out to the charities are fine.

W

wardz1

In my last message about QCD I should have mentioned that TT completed the iQCD info correctly on my 1040. So why did the IRS separate out my return for audit and claim that I had not reported the RMD from my IRA?.......who knows!

I

Irene2805

To be on the safe side, I would highly recommend following the IRS guidance exactly: The check must be issued "directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions." [IRS Pub. 590-B - Distributions from Individual Retirement Accounts (IRAs), p. 13, column 1]

@wardz1

You were very fortunate that the IRS representative cancelled the assessment and penalties, but I wouldn't count on this treatment in the future. The IRS rules very clearly state that the check has to come from the trustee of the IRA.

W

wardz1

Thanks for the heads up, but the checks that I write on my IRA clearly list Fidelity Trust as the Trustee of the account. I talked to Fidelity about this when I started doing the QDCs right at the beginning and they confirmed their checks would qualify, but just to be safe I will talk to them again. Thanks for communicating on this.