Vanguard’s online RMD tool updated to facilitate QCDs

[GerryL]

Just got off the phone with my Flagship rep. I’ll be starting RMDs next year and it seemed a good time to get answers to questions about the mechanics of executing Qualified Charitable Distributions and setting up RMD tax withholding. (I plan to do QCDs in the 1st half of the year and the remainder of my RMD in the 2nd half of the year, with state and fed taxes withheld.)

She told me that the online tool for requesting an RMD (if you have not set up auto distributions) has recently been updated to make it easier to request QCDs. I can’t go online to see how it works (since I’m still not RMD-eligible) but here is what she said:

Use the drop-down menu to request the distribution be paid by check.
Then you’ll have an option to designate the check as a QCD and to enter the name of the recipient, and they’ll mail the check to you to forward to the charity.
[I’m guessing you’ll need to repeat the RMD request for each separate QCD. Maybe someone here can try it and let us know if you can designate multiple QCDs in a single transaction.]

She reminded me that it is a good idea to photocopy the check before sending it out and that the QCDs would not be called out separately on the 1099 (but we all knew that, right?).

It appears that Vanguard is looking for ways to encourage self-service as QCDs become more popular with retirees.

[fourwheelcycle]

I just went to look at it. The drop down menu for requesting an RMD was there, but perhaps since I am not yet 70 1/2, the QCD option was not listed.

I have already talked to my Vanguard rep about how to do QCDs. I am going to do them, but it will be tight to get the checks out during calendar 2018 because I will not turn 70 1/2 until early December. My rep said to put together a list of all my charities, with their proper names and addresses so Vanguard can verify that they qualify for QCDs, and submit the list with the amount for each charity to her by December 1. She will send my list to the Vanguard group that processes QCD checks on the day I turn 70 1/2, and alert them that I need to receive the checks as soon as possible. She will then keep in contact with the QCD group to try and assure I receive the checks in time to mail them on to my charities before the end of 2018.

I asked her if the checks had to be cashed during calendar 2018. She was pretty sure Vanguard would report my distribution on my 1099-R with the date they issued the checks. I should be able to receive and then mail out the checks with a week or more to spare before the end of 2018. I plan to include a cover letter with each check advising the charity my gift is for calendar year 2018. Hopefully, the receipts the charities send to me will also identify the amounts as donations for 2018.

I think scanning the dated checks, with my dated cover letters, and saving PDF copies will be a good idea.

[Steelersfan]

I'm 70 1/2 and have not taken my RMD this year. I went through the sequence and saw no place where I could designate a QCD.

Maybe it's in the planning stage and not operational yet.

[jdb]

This is very good news. I plan to use all of my RMD at Vanguard in last few months of this year for QCDs. Thanks.

[RudyS]

There's a similar thread on this page, down maybe 30, in which, in a reply, I mentioned the possibility of writing a Vanguard check from your IRA account to accomplish this. You might look there.

[dewey]

I start my RMD's next year too...but don't turn 70 and 1/2 until Dec. 28th. That's going to be tight for the QCD's. But if they get the checks cut and mailed before Jan. 1, 2020, that would seem to work okay? There has to be a way to avoid missing out on the QCD's otherwise it's not fair to some folks. Maybe it's just a case of--life isn't always fair?

[sport]

(I plan to do QCDs in the 1st half of the year and the remainder of my RMD in the 2nd half of the year, with state and fed taxes withheld.)

Be sure to wait until you have passed your 70¹/₂ birthday before you make any QCDs

[sport]

My rep said to put together a list of all my charities, with their proper names and addresses so Vanguard can verify that they qualify for QCDs, and submit the list with the amount for each charity to her by December 1.

As far as I am aware, Vanguard does not verify that the charities qualify. Unless something has changed recently, Vanguard has always treated QCDs as regular withdrawals and are identified as QCDs only when you fill out your Form 1040. The 1099R that Vanguard has sent for last year does not refer to QCDs in any way. They are just withdrawals. In fact, whenever I have asked V to send a QCD check they enclose a little flyer that says I can get my money faster if I link my IRA account to my checking account for an electronic withdrawal.

[Carl53]

For those turning 70.5 late in the year, could it not work out if they let the QCD slide until early the next year even if they were going to do the same again in that year since they can delay the 70.5 RMD until the next year? That is of course assuming that they did not want to collectively donate more than 100k for the two year period.

[GerryL]

My rep said to put together a list of all my charities, with their proper names and addresses so Vanguard can verify that they qualify for QCDs, and submit the list with the amount for each charity to her by December 1.

As far as I am aware, Vanguard does not verify that the charities qualify. Unless something has changed recently, Vanguard has always treated QCDs as regular withdrawals and are identified as QCDs only when you fill out your Form 1040. The 1099R that Vanguard has sent for last year does not refer to QCDs in any way. They are just withdrawals. In fact, whenever I have asked V to send a QCD check they enclose a little flyer that says I can get my money faster if I link my IRA account to my checking account for an electronic withdrawal.

I asked my rep whether I needed to provide any info in addition to the name (address, EIN?). She said no. Just the name for the Pay To line on the check.

[GerryL]

(I plan to do QCDs in the 1st half of the year and the remainder of my RMD in the 2nd half of the year, with state and fed taxes withheld.)

Be sure to wait until you have passed your 70¹/₂ birthday before you make any QCDs

Oh yes. I've got the date engraved on my desk. My half birthday is early in the year.

[RadAudit]

I went through the sequence and saw no place where I could designate a QCD.

Look here viewtopic.php?f=2&t=243615

Those steps seem to work

[1210sda]

In my version of Vanguard's website.....

First, click on your IRA.

Click the "Transact" button to get drop down box for Buy/Sell/Exchange. Click on "Sell".

You are asked "Where's the money coming from?" Click appropriate holding.

Then you are asked Where's the money going? On the drop down box, choose "Send me a check"

When you do that, A QCD box shows up. Check the box and a "name of the charity" box shows up.

Enter the name of the Charity

Make you withholding choice.

Submit.

That's it !!

[GerryL]

In my version of Vanguard's website.....

First, click on your IRA.

Click the "Transact" button to get drop down box for Buy/Sell/Exchange. Click on "Sell".

You are asked "Where's the money coming from?" Click appropriate holding.

Then you are asked Where's the money going? On the drop down box, choose "Send me a check"

When you do that, A QCD box shows up. Check the box and a "name of the charity" box shows up.

Enter the name of the Charity

Make you withholding choice.

Submit.

That's it !!

Thanks for clarifying the steps. Before creating this post I did a search to see if anyone had already written about this new feature. For some reason the March 6 post did not display. Oh well. More chance that the QCDers will find this information.

[Steelersfan]

I went through the sequence and saw no place where I could designate a QCD.

Look here viewtopic.php?f=2&t=243615

Those steps seem to work

Thanks for that, but that seems to apply to accounts that have been converted to brokerage accounts. I'm still holding onto my mutual fund account so that doesn't work for me.

It might be a reason to finally accept their persistent invitations to switch.

[sport]

My rep said to put together a list of all my charities, with their proper names and addresses so Vanguard can verify that they qualify for QCDs, and submit the list with the amount for each charity to her by December 1.

As far as I am aware, Vanguard does not verify that the charities qualify. Unless something has changed recently, Vanguard has always treated QCDs as regular withdrawals and are identified as QCDs only when you fill out your Form 1040. The 1099R that Vanguard has sent for last year does not refer to QCDs in any way. They are just withdrawals. In fact, whenever I have asked V to send a QCD check they enclose a little flyer that says I can get my money faster if I link my IRA account to my checking account for an electronic withdrawal.

I asked my rep whether I needed to provide any info in addition to the name (address, EIN?). She said no. Just the name for the Pay To line on the check.

That is correct. It is your responsibility to make certain the charity is qualified. I would not depend on Vanguard to do that for me.

[fourwheelcycle]

As far as I am aware, Vanguard does not verify that the charities qualify.

Your memory is probably better than mine! I may have misremembered the info my Vanguard rep said to include.

In any event, I will work with her in detail as my 70 1/2 birthday approaches. Other posts in this thread, and a link to a previous thread, have clarified how to request QCD checks online at Vanguard. I will try that technique next year for my 2019 QCDs. This year I will be so close to the end of the year that I will just submit a full list of requested checks to my Vanguard rep and let her bird dog it through the system.

[Alan S.]

For those turning 70.5 late in the year, could it not work out if they let the QCD slide until early the next year even if they were going to do the same again in that year since they can delay the 70.5 RMD until the next year? That is of course assuming that they did not want to collectively donate more than 100k for the two year period.

Yes, this is an option.
However, delaying the first RMD will make the second year RMD about 3.7% higher than it would have been. If you wanted no taxable income in the 70.5 year, you could do just the QCD. You have a choice to defer part of your first RMD if you want, as well as the all or nothing option. So if your QCD is smaller than your RMD for the first year, you could do just the QCD and defer the rest up to the following 4/1 date. Any distribution you take in the first year will reduce the second year RMD by reducing the 12/31 balance used to calculate the second year RMD.

And if you have basis in your IRA, doing a QCD will reduce your pre tax balance only, making your remaining basis a higher % of subsequent distributions.

[Carl53]

For those turning 70.5 late in the year, could it not work out if they let the QCD slide until early the next year even if they were going to do the same again in that year since they can delay the 70.5 RMD until the next year? That is of course assuming that they did not want to collectively donate more than 100k for the two year period.

Yes, this is an option.
However, delaying the first RMD will make the second year RMD about 3.7% higher than it would have been. If you wanted no taxable income in the 70.5 year, you could do just the QCD. You have a choice to defer part of your first RMD if you want, as well as the all or nothing option. So if your QCD is smaller than your RMD for the first year, you could do just the QCD and defer the rest up to the following 4/1 date. Any distribution you take in the first year will reduce the second year RMD by reducing the 12/31 balance used to calculate the second year RMD.

And if you have basis in your IRA, doing a QCD will reduce your pre tax balance only, making your remaining basis a higher % of subsequent distributions.

I was thinking mostly about Dewey with the 12/28 70.5 date. I really doubt that his QCD is going to make it out by year's end unless he is able to do it online. Hopefully for him it will appear as an option on 12/28/19, a Saturday. Am I correct in assuming that the date of one requesting the distribution does not determine year to which it applies, but the date of the actual check?

[sport]

For those turning 70.5 late in the year, could it not work out if they let the QCD slide until early the next year even if they were going to do the same again in that year since they can delay the 70.5 RMD until the next year? That is of course assuming that they did not want to collectively donate more than 100k for the two year period.

Yes, this is an option.
However, delaying the first RMD will make the second year RMD about 3.7% higher than it would have been. If you wanted no taxable income in the 70.5 year, you could do just the QCD. You have a choice to defer part of your first RMD if you want, as well as the all or nothing option. So if your QCD is smaller than your RMD for the first year, you could do just the QCD and defer the rest up to the following 4/1 date. Any distribution you take in the first year will reduce the second year RMD by reducing the 12/31 balance used to calculate the second year RMD.

And if you have basis in your IRA, doing a QCD will reduce your pre tax balance only, making your remaining basis a higher % of subsequent distributions.

I was thinking mostly about Dewey with the 12/28 70.5 date. I really doubt that his QCD is going to make it out by year's end unless he is able to do it online. Hopefully for him it will appear as an option on 12/28/19, a Saturday. Am I correct in assuming that the date of one requesting the distribution does not determine year to which it applies, but the date of the actual check?

It is the date the money comes out of the account. If Vanguard writes the check, it is the date of the check. If the investor writes the check, it is the date the money comes out of the account which depends on when the check is cashed.

[Spirit Rider]

Remember that the year-end balance of the year before is used when calculating the RMD and the first distribution(s) in any year is/are deemed to be RMDs if within the calculated amount.

This can have impacts on RMDs, QCDs and rollovers. There may be actions that you want to take in the year prior to the year for which RMDs are first required. Within the year for which a RMD is required, the timing of distributions can be very important.

[LarryG]

When I read this thread I decided to try a withdrawal from my RMD and designate a charity. I used one of our charities to which we send a small contribution. The system works well and Vanguard indicated that a check will be sent within 2 days.
We plan to use this for the 20 charities that we support.

LarryG

[Electron]

She told me that the online tool for requesting an RMD (if you have not set up auto distributions) has recently been updated to make it easier to request QCDs.

That's great news and I confirmed that it works for my case.

Doesn't it still work even if Automatic RMD Distributions are set up? If it does work, I think the complication may be that any automatic distribution amount would remain the same.

In regards to the QCD checks, it would be great if Vanguard provided an online image of each check. Does anyone know if that is the case?

[GerryL]

She told me that the online tool for requesting an RMD (if you have not set up auto distributions) has recently been updated to make it easier to request QCDs.

That's great news and I confirmed that it works for my case.

Doesn't it still work even if Automatic RMD Distributions are set up? If it does work, I think the complication may be that any automatic distribution amount would remain the same.

In regards to the QCD checks, it would be great if Vanguard provided an online image of each check. Does anyone know if that is the case?

They mail the actual check to you -- made out to your charity -- so you can send it along with a cover letter. I clip the check to the blank space on the cover letter and scan an image for my records.