By Ian Berger, JD
IRA Analyst
Question:
Hello Mailbag Folks,
I may have missed something in one of the Ed Slott newsletters, but I thought that if one contributed to a non-profit directly from an IRA account to the non-profit, the amount would not be taxed. I made my first required minimum distribution (RMD) in this way and my new Form 1099-R shows that the RMD is taxable. Am I incorrect? Are you able to point me in the direction of something to read about this for 2025-2026, please?
Looking forward to any information.
Kind Regards,
Marlene
Answer:
Hi Marlene,
You are correct that a direct transfer from an IRA to a qualifying charity is a non-taxable transaction known as a qualified charitable distribution (QCD). A QCD can satisfy an RMD if it is paid out of the IRA before the RMD comes out. When the custodian issued you a 2025 Form 1099-R, it reported your RMD as fully taxable because it did not know you used a QCD to satisfy all or part of that RMD. It is up to you to disclose on your 2025 Form 1040 that your RMD (or part of it) is not taxable. You do that by reporting the full amount in line 4a, reporting only the difference between the RMD amount and the QCD in box 4b, and checking box 2 (“QCD”) in line 4c.
Question:
We have a client, age 73, that wants to start converting his traditional IRA to a Roth IRA over a period of several years. He has other Roth IRAs that were established over 5 years ago. He was told by an IRS representative that each Roth conversion would have its own 5-year rule before the earnings could be withdrawn without a penalty. I thought that since he is over the age of 59½ and that he has other Roth IRAs that were established over 5 years ago, that the 5-year rule would not apply to his Roth conversions. What do you say on this? I cannot find the answer to this on the IRS website.
Thanks!
Frank
Answer:
Hi Frank,
There are two 5-year holding periods (or clocks) for Roth IRA distributions: one for determining if there’s a penalty on distributions of converted amounts before age 59½, and the other for determining if earnings on Roth IRA contributions and conversions are taxable. Your client doesn’t have to worry about the first 5-year clock because his withdrawals will come out after age 59½. He also doesn’t have to worry about the second clock because his withdrawals will come out after age 59½ and he has had a Roth IRA for at least 5 years. So, all of his Roth IRA distributions will be tax and penalty-free.
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-roth-ira-5-year-rules-todays-slott-report-mailbag/