Can a portion of our RMD also be considered a Qualified Disaster Distribution?

[Anonymous]

At the end 2018, my wife and I both had to take RMDs from our IRAs.  In 2018, we also had to replace our roof, damaged by Hurricane Irma in FL in Sept 2017.  Our insurance deductible portion for the roof replacement was $8,846, a figure smaller than the total of our RMDs.  Can a portion of our RMDs also be considered Qualified Disaster Distribution?

[dmertz · Accepted solution]

Yes, you can designate an RMD to be a Qualified Disaster Distribution.  Doing so would mean that you would include the distribution in income in equal parts over 3 years, but I'm not sure that that would be particularly beneficial since it would just be moving taxable income from 2018 into a future year where it could potentially bump you into a higher tax bracket or increase the amount of Social Security income that is taxable in the long run when combined with the future RMDs.  But you'll need to do your own analysis on that.

https://www.irs.gov/publications/p590b#en_US_2018_publink100073838

[Anonymous]

Thank you very much.  The small income increment seems unlikely to increase our marginal tax rate, but who knows, it could.  I am more concerned that the Qualified Disaster Distribution deferring income tax on the RMD could cause an audit.  The cost of an audit, in aggravation, time and money would swamp the small benefit of the Qualified Disaster Distribution designation.  I will enter the Disaster designation into TurboTax and see how much it diminishes our income tax burden for 2018 before I decide.  Thank you.