IRA RMD again questions?

Ended 12/31/09.

Pub 590?

Ended 12/31/09.

If you made a QCD during 2009, it could have been part of your RMD, which you did not have since it was 2009.

A QCD could have been used whether or not you itemize.

The ability to donate IRA money expired once and was extended (thru

2009). Its fate is in a current bill that would extend it yet again.

If extended, you would be permitted to use RMD money to fund your charitable donations, in effect getting a deduction without itemizing. The issue is a bit moot if you itemize, as I don't believe donations impact AMT. So no benefit to donate from IRA if you are itemizing that I am aware (I'll be corrected if I am mistaken on this point).

I've read so little about this, I'm curious if anyone has stats on how many people (a) were in a position to take advantage, and (b) did.

Joe

I don't know if a donation from an IRA counts toward the "penalty if too much is withdrawn in one year" amount.

Seth

There's a penalty for not withdrawing RMD (50%). No penalty (that I know) for taking too much, just the tax due. The donation deal came with a $100K cap, IIRC.

AMT can be affected by AMTI and making a QCD reduces AMTI.

AMTI is also reduced by itemized deductions such as charitable deductions, but they may be in a phase out range.

What penalty? An RMD is only the MINIMUM amount required to be withdrawn once you are age 70-1/2 or older. However, if you want, you could drain the entire IRA account in one year. Of course, in 2009, NO RMD was required.

A QCD provides a benefit in several ways. First, it reduces AGI and subsequently may reduce the amount of SS benefit that is taxable. Second, if you itemize, a reduced AGI allows more of your medical and miscellaneous deductions to be used. A QCD also is not subject to the

50% charity cutoff, possibly allowing more of your other charity contributions to be claimed as a deduction.

Having the custodian remit directly to the charity keep the amount out of your gross income. This could result is less taxable social security, more medical deductions, more miscellaneous deductions, and a better deal on all the various phase outs.

There was such a penalty in the infancy of IRAs, but even Congress was able to quickly figure out that it was silly to punish people for saving and making good investment choices, and it was repealed.

Phil Marti Clarksburg, MD

I was remembering the "excess 10% tax if you withdraw over $130K(+-) in a year" and not that it had been repealed.

Seth