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How do I record a RMD used for QCD from solo 401k? TT only provides for 1099R's that have the IRA/SEP/SIMPLE box checked. My 1099R doesn't have this box checked.

Forum|Forum|7 years ago
June 6, 2019
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Best answer by MichaelL1

Qualified charitable distributions.

A qualified charitable distribution (QCD) generally is 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. You must be at least age 70½ when the distribution was made.

Source: https://www.irs.gov/publications/p590b#en_US_2018_publink100041439

MichaelL1

Employee

A qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity.

The 401K would not qualify.

M

MESMITHAuthor

According to IRS codes (that I looked up) a 401k does require RMD's and is treated the same as a IRA. TT does allow for this. The investment professional also agrees with this.

MichaelL1

Employee

I agree that a 401K has a RMD. While similar in many respects IRA's and 401K's have some different rules. I am a CPA and I am not sure your investment advisor is, but I would have him show you where he found this.

In the example below is where a tax professional suggested a client with a 401K get a QCD by transferring amount to the IRA and doing it that way (so it was within the tax laws).

Here is a way to do this within the tax code.

Yes, client can do a direct rollover of intended QCD amount to a new or existing IRA account. Assuming client has actually passed 70.5 (to the day), client can then do a QCD from the IRA account. However, if client has already taken any IRA distribution anytime this year, the QCD will not offset the taxable income from the earlier IRA distributions which would be deemed to apply to his IRA RMD. Therefore, to get the maximum benefit from the QCD, the client should not have taken a prior IRA distribution.

<a rel="nofollow" target="_blank" href="https://www.irahelp.com/forum-post/33766-401k-service-withdrawal-and-qcd">https://www.irahelp.com/forum-post/33766-401k-service-withdrawal-and-qcd</a>

D

dmertz

Employee

A distribution that is sent to directly charity from a 401(k) is not a QCD. It can only be reported on Schedule A as a charitable deduction. As TurboTaxMichaelL1 said, to make a QCD using money that is in a 401(k) you must first roll that money over from the 401(k) to a traditional IRA and then make the QCD from the IRA. QCDs are only permitted from IRAs, not from qualified retirement plans like 401(k)s.

The problem is that the first money distributed from your 401(k) during the year is your RMD for the 401(k) and an RMD is not eligible for rollover. So if you want your RMDs to go to charity as QCDs, you'll have to roll over all of your 401(k) balance to an IRA (after satisfying the current year's RMD for the 401(k) since that portion is not eligible for rollover), and then you can make QCDs from the IRA.

MichaelL1Answer

Employee

Qualified charitable distributions.

A qualified charitable distribution (QCD) generally is 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. You must be at least age 70½ when the distribution was made.

Source: https://www.irs.gov/publications/p590b#en_US_2018_publink100041439

P

panglin

Where do I enter this QCD to a community church distributed from my broker directly to the church properly to be recognized for tax exemption reporting?

Critter-3

@panglin

You should have gotten a 1099-R for the distribution and after you enter that form simply follow the interview screens in that section to indicate how much of the distribution was a QCD.

W

Walt-in-Galt

Retired CPA here. As has been discussed, if you have a 401(k) or 403(b) you need to roll funds over to an IRA and make the QCD from THAT account. Couple of things:

1) IF you still have a 401(k) you should consider rolling it over to an IRA generally: You have more control over investment choices AND can control fees better.

2) Rolling from 401(k) to IRA **this year** does NOT eliminate the 401(k) RMDs for THIS year. You still get the benefit of making what is essentially a "tax deductible" contribution THIS YEAR, but that will be IN ADDITION to the 401(k) RMD. NEXT YEAR, if you rolled the entire 401(k) to an IRA and have no 401(k) balance at the end of this year, then the entire IRA RMD is available for a QCD. Clear as mud?