By Sarah Brenner, JD
Director of Retirement Education
Question:
If a grandchild, age 30, inherits IRA assets from her grandparent, age 92, and has to take required minimum distributions (RMDs) from the inherited IRA, can she send those RMDs directly to charity and not be subject to tax?
Chris
Answer:
Hi Chris,
It sounds like you are describing a qualified charitable distribution (QCD) where funds are transferred tax-free from an IRA to a charity. While an IRA beneficiary can do a QCD, the beneficiary must be age 70½ or older. The age of the deceased IRA owner does not matter. Unfortunately, because the grandchild is only age 30, she cannot do a QCD.
Question:
Hi Ed and Team
If a parent, age 86, inherited their son’s IRA who passed at age 58, does the parent still have 10 years to withdraw the funds? A lot is discussed about beneficiaries younger than the deceased, but not really beneficiaries that are older.
Thanks!
Janet
Answer
Hi Janet,
This is an interesting scenario. Any beneficiary who is not more than ten years younger than the IRA owner is an eligible designated beneficiary (EDB). This includes beneficiaries who are older than the IRA owner.
When an IRA owner dies before their required beginning date (April 1 of the year following the year the IRA owner reaches age 73), an EDB can choose to stretch distributions from the inherited IRA over their single life expectancy or use the 10-year rule with no annual RMDs. In your situation, the life expectancy of the parent beneficiary, age 86, is less than 10 years, so it may make sense to use the 10-year rule instead of the stretch for a longer payout period with no annual RMDs.
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/qualified-charitable-distributions-and-inherited-iras-todays-slott-report-mailbag-3/