Will use QCD again, more so

[question everything]

It is not just the the amount in the IRA account rose significantly, but that the denominator used to calculate RMD is lower.

We used to have the funds 50:50 stocks and bonds. After the 2016 elections we changed to 40:60 stocks and bonds. I thought that withdrawing from the stock fund would keep me in that ration, did not. I may have to transfer some

Yes, I suppose problems of "the wealthy." We are not wealthy, certainly not compared to most members of Congress, but we are comfortable enough to not need government assistance and contribute to worth causes and politicians.

Keeping my fingers crossed.

[progree]

1. Was the QCD thing a PITA, with medallion signature guarantee and snail mail paperwork ...

Last edited Mon Jan 3, 2022, 06:48 PM - Edit history (1)

... and idiots muffing that up the first try or two (see Trustone below),

or, I would presume, just a simple electronic transaction (though I haven't noticed that but haven't looked for it at Vanguard or Fidelity or Schwab to see if they make it sane and rational).

I'm eligible this year for the first time to do a QCD, so will be looking into that for sure.

I have a sizable inherited Traditional IRA account that I've been doing RMDs on since 2005 or so, and will continue that likely until as far out as 2034 when the denominator drops below 1.0 and that becomes the end of that.

Doing QCD's on that will be nice: my divisor in 2021 was just 13.6 and my 2021 RMD on this account was about $15,000, meaning my tax bill goes up by $15,000 X my marginal tax rate.

(And my marginal tax rate is higher than one would think from the tax tables because it makes $15,000 more of my capital gains subject to the 15% capital gains tax, so add 15% onto the marginal tax rate that the tax tables show -- something my enrolled agent tax preparer of nearly 40 years of experience didn't know about. The capital gains comes as a result of my charitable gift annuity, sigh.)

Additionally I have a small regular Traditional IRA account - won't have to take RMDs on it until next year, 2023.

I was hoping to, and long long planning to convert this small amount to a Roth in 2021, and so reduce the number of accounts I have (very important to me to simplify my finances) but Trustone Credit Union (Wisconsin and Minnesota branches) tried to cheat me (would not convert it to a Roth unless I liquidated a CD with 2 1/2 years left on it and having a higher interest rate than what is currently available -- that would cost me $200 in lost interest), so after numerous appeals and a social media campaign, I decided to transfer this account to Vanguard.

(They were also, it appears, planning -- as the way to do the Roth conversion -- to liquidate my traditional IRA and "convert" it into a Roth by making a Roth CONTRIBUTION -- that would have been a tax disaster with penalty because I -- not having earned income in 2021 -- am not eligible to make any kind of IRA CONTRIBUTION. So I said, please don't do that!!).

Back to the transfer to Vanguard -- you guessed it, Trustone muffed that up. Even though I started the transfer on November 19 by 2nd day air (yes, a bunch of snail mail crap was required) I didn't find out about the Trustone screwup until December 28, by then too late to even do plan B - a 60 day rollover blah blah.

My inability to convert this account in 2021 was a big financial blow, because 2021 was the last year I got a special tax break for donating my farm to a charity, which would have reduced my tax bite by 30% on doing this conversion. I figure that lost opportunity cost me $1400, GRRRRR

Anyway, I'm stuck with an annoying little regular traditional IRA account that I had hoped to eliminate last year. Probably will just donate it away rather than contend with annual RMDs or QCDs. Too pissed to do a Roth conversion this year at a $1400 higher cost than last year because of the criminals (undisclosed hidden fees) and incompetents at Trustone.

Yes these are the problems of the "wealthy" -- old people that managed to put away a little every year for 40+ years -- and like you say, we have that much more to donate to political campaigns and worthy charities. And not only being not financially dependent on others and the government, but paying a ton in taxes.

Which is why it bothers me so much to read DUers blathering on about the Wall Street Casino where the House has the edge, blah blah and the coming crash the coming crash the coming crash -- https://www.democraticunderground.com/11213498 -- and by convincing themselves that the best they can do is earn a fraction of a percent in a "safe" CD or money market account, they are risking a far higher likelihood of running out of savings in their old age. And less to none to give to worthwhile campaigns and charities.

Yes, a crash is coming sometime down the road, but when you have 2 or 3 doublings of equity values, then occasionally temporarily giving up one of those doublings (which is what happens when the market crashes 50%), still puts one way ahead of fixed income alternatives.

[question everything]

2. Not sure what PITA is.

No, it was really easy. More so if you already know how to withdraw money.

Normally you select a fund to sell, or just for transactions.

On the left side of the screen you see a list of all the finds so you select the fund and the amount.

(In my case first time I had to scroll down to find the CONTINUE button) which takes you to the right side of the screen to select where the money goes: electronic transfer to your bank, a paper check or... QCD.

You give the name of the qualified charity:" Friends of the earth" or something.

The paper check is than withdrawn on the name of the charity c/o progree, One Main St, Any Town Any State 11122.

Once you get the paper check you give it to the charity.

And of course, no tax withholding. Normally I direct 15%. The default is 10%.

[progree]

3. Sorry, PITA Pain in the ass. So the only "paper" / snail mail is Vanguard or whoever mails you

the check and you in turn mail the check to the charity?

I couldn't test it out on my Vanguard TIRA (Traditional IRA) because it has $0 balance, thanks to Trustone, sigh.

But I tested it out on my inherited Fidelity TIRA up to "withdraw from this TIRA" and it gave me a choice of options including "Make a Qualified Charitable Distribution", but then it told me that

"You aren't eligible to make a QCD at this time or our website doesn't support making this transaction for your type of account. For questions or assistance, please call 800-544-6666."

Well, I'm not age 70.5 quite yet, so that hopefully is the problem. I'm pretty sure one can do QCD's from inherited IRAs, I sure hope so.

[question everything]

4. You do know that you don't have to start RMD until 72?

Vanguard an others will not calculate your RMD until you are 72

[progree]

5. The one with Fidelity is an *inherited* IRA and I've been having to take RMD's on it

every year ever since I inherited it back in 2005. There's no minimum age for the RMD requirement for inherited IRAs. Fidelity has also been including an estimated RMD for the year on every statement all along.

As for being able to do those RMDs "the QCD way", that begins the day I turn 70.5. I would expect the Fidelity site to allow me to "QCD" my RMD the day I turn 70.5.

You're right about the Vanguard IRA, a *regular* traditional IRA, which, if it had money in it (and not still at Trustone, Grr), still should not allow me to take any kind of RMD (though I can withdraw money at any time, it wouldn't be an RMD) until the year I turn 72 (which can be delayed until April 1 of the following year, because its the first year I'm subject to an RMD for regular traditional IRAs, but then I'd have to take two RMDs that year).

So much to keep track of, that's why I'm on such a tear to simplify my finances as much as possible before I become a dotard.