retirement

6 Questions Retirees Are Asking About Required Minimum Distributions

When it comes to taking the first required minimum distribution from your IRA or making tax-free withdrawals for charitable donations, the rules can be tricky.

Readers had a lot of follow-up questions about their own situations after reading my columns about when to take your first required minimum distribution from an IRA and the benefits of transferring your RMD directly from your IRA to charity. Here are some answers.

If I turn 70½ in October, can I take my first RMD now, or must I wait until October? Any distribution you take in the calendar year that you turn 70½ counts towards your RMD, even if it's before you reach 70½, says Maura Cassidy, vice president of retirement at Fidelity. And because it's your first RMD, you actually have until April 1 of the following year to make your first withdrawal. So if you turn 70½ in 2018, any distribution you make in 2018 and up until April 1, 2019, can count as your RMD. (After that first required withdrawal, you have to take your RMDs by December 31 each year. So if you wait until 2019 to take that first withdrawal, you'll have to take two RMDs in 2019. "We usually recommend customers take the 2018 RMD by December 2018," says Cassidy.)

I'll turn 70½ later this year and want to give some of my RMD to charity tax-free. Do I have to wait until I'm 70½ to make a qualified charitable distribution, or can I do that anytime during the calendar year that I turn 70½? Even though you can take your RMD anytime in the calendar year you turn age 70½, you can only make the tax-free transfer to charity after reaching 70½. So if you turn 70½ on October 1, you'll need to wait until after that date to make the tax-free transfer to charity.

Since I have until April 1, 2019, to take my first RMD, do I also have until that deadline to transfer my RMD to charity, or must I do that by the end of the calendar year? Even though you have more time to take your first RMD, if you want to make a tax-free transfer from your IRA to charity, you will need to do that by December 31 to count as that first RMD. "Otherwise, it will count in 2019," says Cassidy.

I'm turning 70½ this year, and I was thinking about transferring some of my RMD to charity in 2018 but waiting until April 1, 2019, to take the rest of my first RMD. Can I do that? Yes. You can take the RMD in several distributions as long as you meet the deadline for the full amount, says Cassidy. The timing of your withdrawals determines the tax-filing year when you have to report the distribution. So any portion of the distribution that you take in 2018 would count as income in 2018 (or be reported as a tax-free transfer), and distributions taken in 2019 would count as income in 2019.

I have to take RMDs from my former employer's 401(k). Can I make a tax-free transfer of that RMD to charity, too? If not, can I roll over the old 401(k) into an IRA and then make a QCD? You can only make qualified charitable distributions from IRAs, not from 401(k)s. You can roll over money from the 401(k) into an IRA and then make the tax-free transfer to charity from that account. But there are many other factors to consider before making the rollover. See The Pros and Cons of Rolling Your 401(k) Into an IRA for more information.

Has the law changed to allow tax-free transfers from IRAs to donor-advised funds? I know that donor-advised funds weren't eligible to receive QCDs in the past. No, those rules haven't changed. You can make the qualified charitable distributions from your IRA to eligible charities, but you can't make the tax-free transfer to a donor-advised fund.

For more information about RMDs, see 10 Things Boomers Must Know About RMDs from IRAs.

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