403bs, IRAs, RMDs, and Qualified Charitable Distributions

[egsheldo]

I have a RMD required out of my 403b.  I found out that I cannot do a Qualified Charitable Distribution directly from it.  However, I could make one out of an IRA.  I opened an IRA but cannot rollover money from the 403b to the new IRA.  I am told I must take the RMD payment first, then add a rollover to my new IRA.  For next year, I am sure I will have a RMD from the 403b, can I use the money in the new IRA to satisfy the RMD and do the Qualified Charitable Distribution?  Should I do rollovers throughout the year from my 403b to the IRA to pay the RMD?  Also, I have other RMDs from other sources.  Can I combine all the RMDs and pay them using only one IRA account and making the QCD?  

[dmertz · Accepted solution]

The money in the traditional IRA can only be used to satisfy the RMD of your traditional IRA(s).  It cannot be used to satisfy the RMD from a 403(b).  If you want to avoid having to take RMDs from your 403(b) in 2019 and beyond, after satisfying your 2018 RMD from the 403(b) you'll need to roll the remaining balance in your 403(b) over to an IRA in 2018.

Regarding aggregation of RMDs, only traditional IRA RMDs can be aggregated with those of other traditional IRAs and taken from a single traditional IRA, and 403(b) RMDs can be aggregated with those of other 403(b)s and taken from a single 403(b).  RMDs for other types of qualified retirement plans must be satisfied with a distribution from the particular plan.

If you have other accounts subject to RMDs and are not IRAs, the RMDs for those accounts will have to be satisfied from those accounts; the RMDs from those accounts cannot be satisfied with a distribution from an IRA.  After satisfying the RMD for those qualified retirement plans for the year you can roll the remainder over to an IRA.

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#...

[egsheldo]

Wow, you have really helped with my understanding of the whole process! Thanks so much!

[kahorn1967]

HOW DO I REPORT QUALIFIED CHARITABLE DISTRIBUTIONS  ON TURBO TAX?

[macuser_22]

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@kahorn1967 wrote:

HOW DO I REPORT QUALIFIED CHARITABLE DISTRIBUTIONS  ON TURBO TAX?

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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. Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution.

If you are 70 1/2 or older, the interview will ask if you took the RMD. After that it will ask if you make a charitable contribution. Answer yes and then enter the QCD amount.

The 1099-R box 1 amount will go in the 1040 form line 4b (taxable amount) minus the QCD amount and the total box 1 amount will go on line 4a with "QCD" next to it.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

[pescj]

Was not able to enter QCD as suggested in help... the screen asking if this is  a QCD did not come up in either of the RMD's for my wife or me.

[BillM223]

I hate to ask but were you both 70 1/2 last year? Hmmn, I guess you were if you got the RMD question...

First, after you enter the 1099-R, you should see "Did [name] inherit the IRA from [name]"?

The next screen should be "About this Retirement Account", which will ask about the RMD.

No matter what you answer, the next screen should be "Transfer to Charity?" where you would enter the amount of the trustee to trustee transfer from your retirement account to the charity.

Are you saying that this is not what you see? I suppose the conversation could vary slightly based on the product used. I am using TurboTax Home & Business (the CD/download version).

[macuser_22]

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@pescj wrote:

Was not able to enter QCD as suggested in help... the screen asking if this is  a QCD did not come up in either of the RMD's for my wife or me.

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What code in in box 7 on the 1099-R?

Is the IRA/SEP/SIMPLE box checked?     And did you check it in TurboTax?

[roberto8]

Using Turbotax Premier since NY Times said best.  Unfortunately due to TT2 not knowing how Qualified Charitable Distributions work every time I use TT2 I receive a bill the next year around 4/15 saying I owe $15000 with penalties due to Turbotax not providing any location where I can put down the QCD's.

Here is how it works with Vanguard.  I ask a check be written out to the charity, they mail it to me, and I mail it to the charity.  Aside from the fact I wish to give anonymously it has c/o my name,  VANGUARD DOES NOT SEND A CHECK DIRECTLY TO THE CHARITY SINCE ITS LAWYERS SAY THEY ARE NOT IN THE BUSINESS OF VALIDATING CHARITIES.  No interview ? has asked me about my RMD's, in fact on the big one I cannot even enter it is an RMD since it was imported.  When I put down taxable amount 00, I get this nonsense about prior year excess contributions--I stopped working in 2000.  How can it I put in the 7 charitable organizations, all 501(c)(3) s except the 2 churches, which automatically are charities and show that all of the $23M RMD was disbursed to charitable organizations.?

[Critter]

If an imported 1099-R will not work properly then don't import it ... instead enter it manually ... it only takes a minute. 

Next, the program will ask the proper QCD questions if the 1099-R has a 7 in box 7 and the IRA box checked ... see these screen shots.

[roberto8]

thank you.  will do as you stated.  maybe needs to be a warning of imported id qcd.  cc IRS

[macuser_22]

Importing has nothing to do with it.  All importing does is save you the typing to fill in the 1099-R from boxes in the TurboTax interview.     You still must go through the rest of the interview to determine the taxable amount.   There are many reasons that the box 2a amount on the 1099-R is not the actual taxable amount that the interview follow-up questions determine.

[Ron94]

I received a 1099 for showing a distribution from my IRA equal to the QCD I made in 2020.  How do I report the 1099R?

[MarilynG1]

@Ron94 This link gives info on Reporting a QCD Distribution. 

[macuser_22]

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. Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution.

If you are 70 1/2 or older, the interview will ask if you took the RMD. After that it will ask if you make a charitable contribution. Answer yes and then enter the QCD amount.

****NOTE****  2020 TurboTax presently has a bug the prevents it from asking the necessary question for those with birthdates between July 1, 1949 and June 30, 1950. As a workaround for this, with the CD/download version you can provide the QCD-amount information on the 1099-R in forms mode or in any version of TurboTax you can temporarily change your birthdate in TurboTax to something before July 1, 1949, edit the 1099-R form in TurboTax and answer the question asking how much was transferred to charity, then change your birthdate in TurboTax back to your actual birthdate.

The 1099-R box 1 amount will go in the 1040 form line 4b (taxable amount) minus the QCD amount and the total box 1 amount will go on line 4a with "QCD" next to it.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]