Reply To: QCD as part of nonspousal inherited IRA distribution with estate tax deduction

Home Fairmark Forum Retirement Savings and Benefits QCD as part of nonspousal inherited IRA distribution with estate tax deduction Reply To: QCD as part of nonspousal inherited IRA distribution with estate tax deduction

#7986
Alan S.
Participant

To simplify, your IRD deduction is limited to taxable amounts of the IRD asset, in this case the inherited IRA. If the total balance remaining in the IRA exceeds the remaining IRD deduction, then you can apply the full IRD deduction. If the remaining IRD deduction exceeds the balance in the IRA when the IRA is drained the unused deduction is lost.

That scenario is unusual, since the IRD deduction starts out much smaller than the asset value. However, if the asset loses much of it’s value or the IRD deduction has not been applied correctly, then it’s possible the IRA gets drained before the deduction is fully applied. QCDs will add to this possibility since they reduce the taxable amount of the IRA distributions.

You could do the math. Compare the current IRA value with the total remaining deduction (41,806) to see how much room is left for QCDs. Then adjust the QCD amounts accordingly unless the QCD means more to you than being able to apply the entire IRD deduction.