You have to be 70 1/2 or older to take QCD’s.
This lists the rules if you scroll down a bit.
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That may be old information - I will look on current tax codes. I think QCD are at a different time than RMD and the RMD went to age 72.
I cannot find the rules/instructions on how QCD can go from a retirement fund directly to the charity. However there are some things that are currently being revised. Maybe someone else knows the IRS form and information about this topic.
Here is what I had found:
Not old info.
That doesn’t address Qualified charitable Distribution from retirement funds, what age these can come out of retirement funds w/o penalty (age 59 1/2 or other) and how QCDs can go directly to the charity and bypassing accounting on individual income.
Read page 14!!
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OK - so it keeps the QCD at age 70 1/2 at this point (for 2021 taxes), even though they have gone up to 72 for 2022 (1-1-2022).
Someone in the room in the meeting I attended indicated age 59 1/2 for making a QCD IDK.
But this Publication 590-B also is for Distributions from IRAs “Value of IRA”. I will ask more questions of Financial Advisor about all the assets the gov’t considers (I am feeling like 401k, Roth IRA, etc. is all part of the valuation for required minimum distributions).
Anyone on this thread taking allowable ACD and how are they having it work. Are they at the age with taking RMD and also doing ACD? Taking ACD as being over 59 1/2 and how they have that work.
The IRA Publication 590-B says using form 8606 and also information on Form 1040-SR with the QCD.
@Mabelsmom are you doing QCD and RMD?
I met up with a friend recently at an event - she is 76 and doing the QCD and RMD but I didn’t ask her details on it.
This article answers some of your questions I think. As far as I can see, the major benefit of QCD’s comes when Required Minimum Distributions have to be taken as the charitable donation counts towards the RMD to lower that (taxable) amount.
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Thank you @Onetogo2 - the article spells it all out. IRS will change bits and pieces - for example this QCD direct to charity only is for age 70.5 and older and for IRAs (not other retirement funds subjective to RMD). We converted all our IRA funds into Roth IRAs. We have a large 401k, but not eligible for QCD and we are not 70.5 yet either.
You hear bits and pieces about various tax execution strategies. It was worth investigating. Keeping in check with tax changes. For example, the age 72 RMD which I believe will go into effect for 2022 taxes (with the charts out 1-1-2022).
I asked our FA if we could afford a house in Florida without jeopardizing our financial security. They did the modeling as if we were not generating any employment income. In fact, I am still running my small consulting firm and working as an advisor to startups etc. So, not doing too badly. And I don’t intend to stop. ShawWife is also continuing to work. She is in the rare set of fine artists who are cashflow positive but she probably makes 1/50th to 1/10th of what I make, but her reputation and prices continue to grow (as does her skill) and she is starting to make more meaningful sums of money.
They looked at the effect of a purchase on our net worth at 100 with switches for three sets of assumptions. 1) We become Florida residents or not for tax purposes; 2) We rent or buy; and 3) Our house continues to exist or gets wiped out by rising seal levels or destroyed by Hurricane Joe.
Under assumption 1, the purchase is self-financing if we become Florida taxpayers. We have a net gain in asset value. This makes even more of a difference when I start having to take RMDs.
For assumption 2, not an issue. Buying is better than renting. But no big effect either way.
For assumption 3, not a big effect, especially if we are taxpayers. But, net worth at 100 down only a million or two even if we are not, I believe.
The real issue is short-term funding and they had some suggestions for that as well in terms of our asset allocation.
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We have our cash flow situation going (automatic); DH’s SS is suppose to kick in. They say 2-4 weeks to process and 4 weeks will be in another 1 1/2 weeks - then we will call our local SS office because his file had been hosed before. This is very straightforward. I know SS will send the payments immediately once they have the 3rd step done.
DH saw the cardiologist Friday that will do a cardiac ablation procedure that should get rid of the paroxysmal A Fib DH has been having. Unfortunately a wait schedule of 3 months - but we can respond immediately to a cancellation and will see what happens. This MD has been doing this procedure for 14 years and I know our cardiologist sent us to ‘the best’ MD here for the procedure. Procedure is more effective for someone not with A Fib long. Then DH can get off the Xarelto (blood thinner) once the A Fib is resolved (procedure has 80 - 95% success rate; I think the older patients bring down the number to 80%).
Life moves on. Completing other testing and MD visits.
It’s good you could look at various scenarios. For me (admittedly not after a taxation advantage), I’d prefer the flexibility of just renting somewhere when I want to go. Owning one house is plenty for us, and as we get older extra responsibilities will get even less appealing.
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Dilemma here. My dad recently passed away, and my mom’s Vanguard advisor told her to change my dad’s IRA into an inherited account. We did that, and he just called and said he told us the wrong thing, it should have been an assumed IRA.
So now she either:
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Leaves it in the inherited account and takes RMD’s over ten years. It’s all in Vanguard Total Stock Market and not managed.
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Changes it to an assumed account, gets it managed (but he sells it all and puts it into his 45/55 stock/bond ratio. RMD’s over 18 years.
She doesn’t need the money, she can pay the taxes, but I don’t know. Selling anything in this time of stock market turmoil seems uncomfortable.
To add, I know I should go to Bogleheads, but sometimes people are kind of jerks, and you get too many opinions!
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Note for Option 1, the account just has to be depleted in 10 years, so don’t have to sell this year or next. Could wait until the end of year 10.
For Option 2, mom could simplify life and just combine with her own RMD calculations (assumes she’s 72+). O2 also allows mom to name new beneficiaries, if that’s an issue.
I believe there are two ways to accomplish O2: a) Rollover into mom’s existing account, but a 60-day time limit; b) rename the account ‘Busdriver Mom’s Inherited IRA from Busdriver Dad’, keeping it in a separate Vanguard account #.
btw: has Mom looked at Vanguard Wellesley, a 40/60 fund? She could go this route and drop the PAS fee.
https://investor.vanguard.com/mutual-funds/profile/overview/vwiax
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Yes, my understanding is that as long as your mom is the only named beneficiary, she can assume the account as her own. She doesn’t need to sell anything.
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@kelsmom the issue about selling things is that if she moves it to her account, it’s a managed account, and they would match anything she moves in, to what she has now. So that would be selling the current fund and getting the new ones. Apparently they have a formula based upon your risk tolerance and don’t take instruction on what specific fund to keep.
Good information here. With that in mind, I think maybe we’ll just wait a bit to have her do anything. I’m thinking that it might be best to do whatever ends up being simplest, because everything confuses her at this point. I’m trying to keep my patience, but it’s really hard. Wellesley sounds like a good option, but then that would involve opening up another account. God help me if I have to explain that!
The situation with my parents losing their minds has really made me think about starting to give money preemptively to my kids, while my brain is still partially intact. If we are fortunate to live a really long time, why make them wait until they’re 65-70 to get some of their inheritance, when we surely won’t be using it all.
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Be sure to have all your mom’s stuff done while she is still competent. IDK how your state handles things and what all you need to have in place.
Really sucks about getting wrong information from your Vanguard Advisor.
She is probably in a low tax bracket and taking the RMDs over the 10 years may end up fitting into a plan - gift out to your kids (or moving it into accounts with your kids’ name on it) - that way when the grands can use the money it is there.
We are planning on shifting money into accounts for the DDs under gift amounts each year. Transitioning time.
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I don’t know if there’s anything left to do. I already have POA and she has designated beneficiaries. Doubt she will give anything to grandkids while she’s alive, it’s too difficult for her to think through that.
I’ve been in Wellesley for many years. I’m happy with it.
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