By Andy Ives, CFP®, AIF®
IRA Analyst
QUESTION:
I am age 75 and have just one IRA. I normally do multiple qualified charitable distributions (QCDs) during the year. I also make one or more partial Roth conversions during the year. Please confirm or correct my understanding on the following:
1. All QCDs, in order to be non-taxable, must be taken prior to finishing my required minimum distributions (RMDs) for the year.
2. RMDs must be completed prior to making any partial Roth conversions.
Thanks!
John
ANSWER:
John,
Regarding question 1, your assumption is incorrect. Yes, QCDs are often used to offset RMD income. However, as long as a person is eligible for a QCD and all the standard QCD rules are followed, then you can do QCDs even after you have taken your entire RMD. The QCD will be an additional distribution over and above what you already withdrew for your RMD, but it can still be done. As for question 2, you are correct. All IRA RMDs (even those from other IRAs) must be satisfied before a person can convert all or a portion of any IRA to a Roth IRA.
QUESTION:
I inherited a Roth IRA from a sister who was one year younger than me. If I choose to stretch distributions over my life expectancy, which chart do I use, and whose age do I use for the first RMD?
ANSWER:
If your sister passed away in 2020 or later, then under the SECURE Act rules, you qualify as an eligible designated beneficiary (EDB) because you are “not more than 10 years younger than the decedent.” As an EDB, you can take full stretch RMDs. The first RMD is based on your age (at your birthday) in the year after the year of your sister’s death. Use the Single Life Table to identify your starting factor, and then subtract 1.0 from that initial factor in each successive year. (You do not get to go back to the table each year and look up a new factor.)
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/required-minimum-distributions-and-inherited-roth-iras-todays-slott-report-mailbag/