Can anyone help me find a solution to my QCD problem?

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privateID
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Can anyone help me find a solution to my QCD problem?

Post by privateID »

My mother-in-law is 86 years old and I manage her money for her. I've been doing this for a few years. This year we decided to dive into the world of Qualified Charitable Distributions (QCDs). We went through the current process on Vanguard:

1) Request a withdrawal to a charity. Need to do this from her account, although they told me on the phone if I had full agent authority I would be able to do this step myself (I am currently a partial agent). This is not a big deal for us.

2) They mail her a check in the mail to the charity c/o her address.

3) She gets the check in about week and then mails it to the organization.

I have no problem with step 1, but steps 2 and 3 are a problem as she is 86 years old. I have concerns about her losing mail and also have concerns about her properly sending it to the charity. I spoke to people at Vanguard and asked if we could get checks on her IRA account and just have her write a check directly to the charity. I can do that with her in one sitting. I don't live near her, but this would be tolerable. I was told by Vanguard that they do not offer that option. Since we could get check writing ability, not sure if I understand what they mean when they say they don't offer charitable giving that way. I believe we can just do it.

So, I am just looking for the easiest way to help my MIL make QCDs. We did a trial run for one QCD using Vanguard's method above. Still waiting for the check to appear in her mail. Anyone have other thoughts about how to do this?
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dcnut
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Re: Can anyone help me find a solution to my QCD problem?

Post by dcnut »

I am surprised that Vanguard does not allow check-writing from an IRA. I do this from my Fidelity IRA, which is structured as a brokerage account with an associated core money market.

Perhaps you need to open a Vanguard money market fund in her IRA? This would be linked to her other IRA account(s).
Dottie57
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Re: Can anyone help me find a solution to my QCD problem?

Post by Dottie57 »

Does she have enough money to fund a Donor advised fund? Check into these at Fidelity and Vanguard. The process of distributing is easier.
dbr
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Re: Can anyone help me find a solution to my QCD problem?

Post by dbr »

It can help in these cases to have the mail come to you, either to a PO BOX that you can access or c/o your address.

I assist a family member who is not able to manage some personal affairs. The biggest disasters were associated with letting them get their hands on the mail.
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dcnut
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Re: Can anyone help me find a solution to my QCD problem?

Post by dcnut »

Dottie57 wrote: Wed Sep 22, 2021 10:46 am Does she have enough money to fund a Donor advised fund? Check into these at Fidelity and Vanguard. The process of distributing is easier.
For someone over 70 1/2 years, the QCD is superior to a donor-advised fund. Only a QCD donation can provide an above-the-line tax deduction, which provides special tax advantages.
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cheese_breath
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Re: Can anyone help me find a solution to my QCD problem?

Post by cheese_breath »

If you go with VG sending her the check first, add step 2.5... make copy of the check for her records before sending it off.

If you want to go with check writing from the IRA see...

Checkwriting is available for traditional, rollover, Roth, SEP, and SIMPLE IRAs. It is not available for inherited IRAs.

in https://personal.vanguard.com/us/whatwe ... eckwriting
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heerekj1
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Re: Can anyone help me find a solution to my QCD problem?

Post by heerekj1 »

I asked Vanguard for check writing from a money market fund within my IRA and received the checks. I wrote a check out of it and the charity received it. I plan on claiming it as a QCD.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

dbr wrote: Wed Sep 22, 2021 10:49 am It can help in these cases to have the mail come to you, either to a PO BOX that you can access or c/o your address.
I did ask Vanguard if there was any way the check can be sent to me as an agent. I was told even as a full agent, I would not be able to have it sent to me. Also, I don't want to permanently change her mail address as she lives in another state and I would suspect that would complicate things at tax time.
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Sheepdog
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Re: Can anyone help me find a solution to my QCD problem?

Post by Sheepdog »

Vanguard does offer checks written from IRAs (certain funds) which can be used for her QCDs, if for $250 or more. In my traditional IRA, I write checks from the VFSTX Short Term Investment Grade Fund. I have that fund in that account only for QCD check writing. I just keep it funded as necessary, which, in my case, I have Vanguard automatically invest the dividends from another of the TIRA funds into it.

I write the check and mail it to the charity. It meets the QCD rule. Again, it must be for $250 or more.

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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

Sheepdog wrote: Wed Sep 22, 2021 11:05 am Vanguard does offer checks written from IRAs (certain funds) which can be used for her QCDs, if for $250 or more. In my traditional IRA, I write checks from the VFSTX Short Term Investment Grade Fund. I have that fund in that account only for QCD check writing. I just keep it funded as necessary, which, in my case, I have Vanguard automatically invest the dividends from another of the TIRA funds into it.
Woof
So even though Vanguard told me that they do not offer that option for QCDs, you are saying there is no issue with just writing a check from the account to the charity and claiming it as a QCD. I may end up down this path if I can't find another solution.

Does anyone know of other financial institutions that allow QCD requests online to be sent directly to the charity? That would be optimal and would be enough reason to move her IRA.
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Re: Can anyone help me find a solution to my QCD problem?

Post by Mike Scott »

I think your larger problem with mail (using a forwarding service to send the mail to you etc) as mentioned above would address the larger problems as well as QCDs. If the person can't manage a QCD check, they may not be able to manage routine bills and things. Is it time to get a full POA for everything?
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Sheepdog
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Re: Can anyone help me find a solution to my QCD problem?

Post by Sheepdog »

privateID wrote: Wed Sep 22, 2021 11:12 am ]

So even though Vanguard told me that they do not offer that option for QCDs, you are saying there is no issue with just writing a check from the account to the charity and claiming it as a QCD. I may end up down this path if I can't find another solution.
Yes, as long as she does not receive the money herself. She writes the check and mails it to the charity.
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celia
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Re: Can anyone help me find a solution to my QCD problem?

Post by celia »

This is not a QCD issue as much as an elder issue. It seems that someone else should be handling her finances since she may have problems paying other bills too. One easy way to mitigate this is to minimize the number of requests for QCDs. Make one or two large QCD checks instead of a dozen small requests. Or at least make all the requests on the same day, once a year.

You are also missing a few steps here. When you/she receives a check, you should also make a copy of it for your records since it shows the money is going directly to a charity.

You also should request, then save, an acknowledgement for the check. Keep this with a copy of her tax return at the end of the year as proof it was given to charity.

We sort of combine all these steps by making almost all the requests on one day. When the checks arrive, we write on the non-check area in red ‘please send me an acknowledgement of this one-time donation and do not add me to any mailing lists’. Then we copy all the checks and send them off.

We still have QCD (senior?) problems ourselves. Last year during the covid outbreak, we sent checks to several faith-based schools that were shut down. No one was on campus and we never received acknowledgements. But we asked Vanguard to confirm the checks were cashed and they did in a secure message that I printed out. (The message disappeared after a few months.) This year we misplaced some checks and hadn’t sent them out. After 180 days, Vanguard warns you in a secure message that the checks are expiring and the money will be sent to unclaimed property, where you can claim it. That would be a taxable event so we requested, and received, replacement checks made out to the same charities.

We still need to simplify our lives a lot but it is difficult when you are also looking out for elderly and disabled relatives besides yourselves. Throw in a house sale and a trust settlement after one of them dies! I’m very busy.
Last edited by celia on Wed Sep 22, 2021 11:48 am, edited 2 times in total.
sport
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

I have been writing IRA checks for QCDs for amounts at least $250. For smaller amounts, I ask Vanguard to write the check. They make it out to the charity and mail it to me.
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Post by Bogle7 »

I have zero problems with QCDs from my tIRA at Fidelity.
Checks go straight to the charities.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

celia wrote: Wed Sep 22, 2021 11:41 am This is not a QCD issue as much as an elder issue. It seems that someone else should be handling her finances since she may have problems paying other bills too. One easy way to mitigate this is to minimize the number of requests for QCDs. Make one or two large QCD checks instead of a dozen small requests. Or at least make all the requests on the same day, once a year.
I handle all her finances. All bills are automatic and come out of her account. My sister-in-law lives a few miles away and she does help out with stuff. Getting her mail every day and paying an occasional bill herself is still important to her. So, I think things are working well, at least till this item. The only other issue we have is with EE savings bonds. She has 5 years worth expiring every month. She has been going to the bank and depositing them once a month. I verify things looking at her bank account.

If you do all the QCDs at Vanguard on one day, do you get all the checks on the same day in the mail? I assume you would, but just want to verify that.
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Re: Can anyone help me find a solution to my QCD problem?

Post by cheese_breath »

privateID wrote: Wed Sep 22, 2021 11:56 am ...If you do all the QCDs at Vanguard on one day, do you get all the checks on the same day in the mail? I assume you would, but just want to verify that.
That depends on USPS, not Vanguard.
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Re: Can anyone help me find a solution to my QCD problem?

Post by cheese_breath »

I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they' clear. Therefore if VG does automatic RMDs for you, and a check hasn't cleared before the RMD date, the check withdrawal would be after the RMD is fulfilled.
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sport
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

cheese_breath wrote: Wed Sep 22, 2021 12:05 pm I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they're cashed. Therefore if VG does automatic RMDs for you, and a check isn't cashed before the RMD date, the check withdrawal would be after the RMD is fulfilled.
Yes, that could happen. Another possible problem is that if you write the check near the end of the year, it may not be cashed until after the first of January and would therefore count towards the next year's RMD. This could cause you to not make all of your RMD for the year you write the check. One needs to pay attention to these things.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

sport wrote: Wed Sep 22, 2021 12:21 pm
cheese_breath wrote: Wed Sep 22, 2021 12:05 pm I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they're cashed. Therefore if VG does automatic RMDs for you, and a check isn't cashed before the RMD date, the check withdrawal would be after the RMD is fulfilled.
Yes, that could happen. Another possible problem is that if you write the check near the end of the year, it may not be cashed until after the first of January and would therefore count towards the next year's RMD. This could cause you to not make all of your RMD for the year you write the check. One needs to pay attention to these things.
Vanguard told me it was because of items like these that they do not offer QCDs via check writing. But it sounds like some here do it anyway.
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Re: Can anyone help me find a solution to my QCD problem?

Post by cheese_breath »

privateID wrote: Wed Sep 22, 2021 1:04 pm
sport wrote: Wed Sep 22, 2021 12:21 pm
cheese_breath wrote: Wed Sep 22, 2021 12:05 pm I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they're cashed. Therefore if VG does automatic RMDs for you, and a check isn't cashed before the RMD date, the check withdrawal would be after the RMD is fulfilled.
Yes, that could happen. Another possible problem is that if you write the check near the end of the year, it may not be cashed until after the first of January and would therefore count towards the next year's RMD. This could cause you to not make all of your RMD for the year you write the check. One needs to pay attention to these things.
Vanguard told me it was because of items like these that they do not offer QCDs via check writing. But it sounds like some here do it anyway.
It's not a matter of VG offering QCDs. You claim it on your 1040 as a QCD if you wrote it to a qualified charity. VG doesn't care what you use it for.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

cheese_breath wrote: Wed Sep 22, 2021 1:07 pm
privateID wrote: Wed Sep 22, 2021 1:04 pm
sport wrote: Wed Sep 22, 2021 12:21 pm
cheese_breath wrote: Wed Sep 22, 2021 12:05 pm I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they're cashed. Therefore if VG does automatic RMDs for you, and a check isn't cashed before the RMD date, the check withdrawal would be after the RMD is fulfilled.
Yes, that could happen. Another possible problem is that if you write the check near the end of the year, it may not be cashed until after the first of January and would therefore count towards the next year's RMD. This could cause you to not make all of your RMD for the year you write the check. One needs to pay attention to these things.
Vanguard told me it was because of items like these that they do not offer QCDs via check writing. But it sounds like some here do it anyway.
It's not a matter of VG offering QCDs. You claim it on your 1040 as a QCD if you wrote it to a qualified charity. VG doesn't care what you use it for.
I get that, but the guy on the phone specifically said that I couldn't do it like that. I even went back to him and asked if Vanguard was recommending I not do it that way or are were requiring it to not be done that way (again, not sure how they could require it if they offer check writing on the IRA) . I guess his answer, that I don't remember verbatim, may have just been vague.
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celia
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Re: Can anyone help me find a solution to my QCD problem?

Post by celia »

privateID wrote: Wed Sep 22, 2021 11:56 am If you do all the QCDs at Vanguard on one day, do you get all the checks on the same day in the mail? I assume you would, but just want to verify that.
Likely yes, unless you do them at different times of the day or near market closing. We do ours in the evenings after things quiet down at Vanguard.
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Re: Can anyone help me find a solution to my QCD problem?

Post by cheese_breath »

privateID wrote: Wed Sep 22, 2021 1:30 pm
cheese_breath wrote: Wed Sep 22, 2021 1:07 pm
privateID wrote: Wed Sep 22, 2021 1:04 pm
sport wrote: Wed Sep 22, 2021 12:21 pm
cheese_breath wrote: Wed Sep 22, 2021 12:05 pm I don't have check writing from my IRAs, but would this be a correct assumption?...

... assumption: VG doesn't know what checks you wrote until they're cashed. Therefore if VG does automatic RMDs for you, and a check isn't cashed before the RMD date, the check withdrawal would be after the RMD is fulfilled.
Yes, that could happen. Another possible problem is that if you write the check near the end of the year, it may not be cashed until after the first of January and would therefore count towards the next year's RMD. This could cause you to not make all of your RMD for the year you write the check. One needs to pay attention to these things.
Vanguard told me it was because of items like these that they do not offer QCDs via check writing. But it sounds like some here do it anyway.
It's not a matter of VG offering QCDs. You claim it on your 1040 as a QCD if you wrote it to a qualified charity. VG doesn't care what you use it for.
I get that, but the guy on the phone specifically said that I couldn't do it like that.

As you have already seen from posts here, people ARE doing it like that.

I even went back to him and asked if Vanguard was recommending I not do it that way or are were requiring it to not be done that way (again, not sure how they could require it if they offer check writing on the IRA) .

VG doesn't know whether you're doing a QCD or not.

I guess his answer, that I don't remember verbatim, may have just been vague.
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Re: Can anyone help me find a solution to my QCD problem?

Post by Katietsu »

Since you are new to QCDs, you might be unfamiliar with tax reporting. The QCD is indistinguishable from any other distribution on the the 1099-R. If you send $1000 to the Red Cross or take $1000 from the IRA to hit the slot machines, that $1000 will show up the same on the 1099-R that the IRS receives. You alone are reporting your QCD to the IRS when you do your taxes. Look over some other the other responses in this thread with this in mind. You might see them differently.
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Re: Can anyone help me find a solution to my QCD problem?

Post by Oicuryy »

Vanguard is giving you their conservative interpretation of the phrase "a check from an IRA" in Q&A 41 of IRS Notice 2007-7. For a less conservative interpretation see
https://www.irahelp.com/forum-post/3394 ... -checkbook

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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

Oicuryy wrote: Wed Sep 22, 2021 2:46 pm Vanguard is giving you their conservative interpretation of the phrase "a check from an IRA" in Q&A 41 of IRS Notice 2007-7. For a less conservative interpretation see
https://www.irahelp.com/forum-post/3394 ... -checkbook

Ron
The answer to question 41 is:

A-41. Yes. If a check from an IRA is made payable to a charitable organization
described in § 408(d)(8) and delivered by the IRA owner to the charitable organization,
the payment to the charitable organization will be considered a direct payment by the
IRA trustee to the charitable organization for purposes of § 408(d)(8)(B)(i).

It does not state who has to write that check. A "check from an IRA" can be written by the IRA custodian, or the IRA account holder.
IRS Pub. 590-B has similar wording about payment going directly from the IRA to the charity.
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Re: Can anyone help me find a solution to my QCD problem?

Post by RudyS »

sport wrote: Wed Sep 22, 2021 11:44 am I have been writing IRA checks for QCDs for amounts at least $250. For smaller amounts, I ask Vanguard to write the check. They make it out to the charity and mail it to me.
exactly what I do.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

I appreciate all the responses. At this point, I think I am going to open her a MM in her IRA account that she can write checks against and do it that way. I plan to send the checks within the first 3 quarters of the year to avoid any issues with delays toward the end of the year.

I still don't fully understand why Vanguard suggests you do it the more complicated way. I see no advantage to having Vanguard write the check. Am I missing anything there?
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Re: Can anyone help me find a solution to my QCD problem?

Post by drzzzzz »

privateID wrote: Wed Sep 22, 2021 11:12 am
Sheepdog wrote: Wed Sep 22, 2021 11:05 am Vanguard does offer checks written from IRAs (certain funds) which can be used for her QCDs, if for $250 or more. In my traditional IRA, I write checks from the VFSTX Short Term Investment Grade Fund. I have that fund in that account only for QCD check writing. I just keep it funded as necessary, which, in my case, I have Vanguard automatically invest the dividends from another of the TIRA funds into it.
Woof
So even though Vanguard told me that they do not offer that option for QCDs, you are saying there is no issue with just writing a check from the account to the charity and claiming it as a QCD. I may end up down this path if I can't find another solution.

Does anyone know of other financial institutions that allow QCD requests online to be sent directly to the charity? That would be optimal and would be enough reason to move her IRA.
We have setup check writing on an IRA as well and routinely write checks to charities on the account. We also keep a copy of the check and the acknowledgement letter from the charity. You can write the check from an IRA for any amount in contrast to some other accounts at Vanguard that have branded on the check a $250 minimum.
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Re: Can anyone help me find a solution to my QCD problem?

Post by fleetwdl »

I ran up against the same thing with my mother and her Schwab account. After I wrote a couple of QCD checks from her IRA, they required us to begin going through the request, mail check process that you describe. I think there must be some regulatory requirement that they are responding to.
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Re: Can anyone help me find a solution to my QCD problem?

Post by TheGreyingDuke »

A point of minor relevance...

I have Vanguard write the checks,send them to me and then I send them off. I can go to the Vanguard site and there is clear documentation that the check was written to "The ABC Charity". Making a copy before sending it off is not a bad idea, but if you neglect to do that there is this backup.
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Re: Can anyone help me find a solution to my QCD problem?

Post by FrugalInvestor »

I'm very pleased that this discussion has come up. These sorts of discussions are one reason that I am such a fan of Bogleheads.

My wife and I donated to a DAF for the first time a couple of years ago. I was aware of QCDs but didn't qualify to utilize them....but I will before too long! This post got be thinking more about QCDs so I did a little googling and came across the followinng paper comparing the two forms of Charitable giving.

https://www.reninc.com/wp-content/uploa ... D-WH-1.pdf

I'm now fairly certain that I will be taking advantage of QCDs in the future.

Thanks again Boglheads for all you do to enhance my financial IQ! :sharebeer
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Re: Can anyone help me find a solution to my QCD problem?

Post by Sheepdog »

privateID wrote: Thu Sep 23, 2021 6:57 am I appreciate all the responses. At this point, I think I am going to open her a MM in her IRA account that she can write checks against and do it that way. I plan to send the checks within the first 3 quarters of the year to avoid any issues with delays toward the end of the year.

I still don't fully understand why Vanguard suggests you do it the more complicated way. I see no advantage to having Vanguard write the check. Am I missing anything there?
Just be sure, if she does write her own checks from her IRA, that she understands the checks must be for $250 or more. They won't accept checks for under $250.
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Re: Can anyone help me find a solution to my QCD problem?

Post by Sheepdog »

drzzzzz wrote: Thu Sep 23, 2021 7:36 am You can write the check from an IRA for any amount in contrast to some other accounts at Vanguard that have branded on the check a $250 minimum.
Would you please expand this comment when you say "You can write a check from an IRA for any amount ...........' My IRA checks state "NOT VALID FOR LESS THAN $250.00"
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

Sheepdog wrote: Thu Sep 23, 2021 8:57 am
drzzzzz wrote: Thu Sep 23, 2021 7:36 am You can write the check from an IRA for any amount in contrast to some other accounts at Vanguard that have branded on the check a $250 minimum.
Would you please expand this comment when you say "You can write a check from an IRA for any amount ...........' My IRA checks state "NOT VALID FOR LESS THAN $250.00"
Sheepdog, my checks are like yours. Perhaps the brokerage accounts are different than the mutual fund accounts.
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

fleetwdl wrote: Thu Sep 23, 2021 7:55 am I ran up against the same thing with my mother and her Schwab account. After I wrote a couple of QCD checks from her IRA, they required us to begin going through the request, mail check process that you describe. I think there must be some regulatory requirement that they are responding to.
How can they require anything? I can write an IRA check for any purpose I wish. If the payee is a qualified charity, I report that amount as a QCD on my tax forms. If the payee is not a charity, it is an ordinary taxable distribution. The money leaves my account when the check is cashed.
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Re: Can anyone help me find a solution to my QCD problem?

Post by jebmke »

FrugalInvestor wrote: Thu Sep 23, 2021 8:25 am I'm very pleased that this discussion has come up. These sorts of discussions are one reason that I am such a fan of Bogleheads.

My wife and I donated to a DAF for the first time a couple of years ago. I was aware of QCDs but didn't qualify to utilize them....but I will before too long! This post got be thinking more about QCDs so I did a little googling and came across the followinng paper comparing the two forms of Charitable giving.

https://www.reninc.com/wp-content/uploa ... D-WH-1.pdf

I'm now fairly certain that I will be taking advantage of QCDs in the future.

Thanks again Boglheads for all you do to enhance my financial IQ! :sharebeer
For some of us, the shift of the RMD to age 72 for some makes the decision a bit more nuanced. QCD's can still be taken at 70.5 but the financial case to do that isn't nearly as compelling. The inability to do QCDs anonymously is also an issue but perhaps one I will eventually overlook.
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Parthenon
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Re: Can anyone help me find a solution to my QCD problem?

Post by Parthenon »

TheGreyingDuke wrote: Thu Sep 23, 2021 8:06 am A point of minor relevance...

I have Vanguard write the checks,send them to me and then I send them off. I can go to the Vanguard site and there is clear documentation that the check was written to "The ABC Charity". Making a copy before sending it off is not a bad idea, but if you neglect to do that there is this backup.
What I don't care for when Vanguard writes the check and sends it to me is I have no way of knowing if the charity actually receives and cashes the check once I send it to them. The documentation at Vanguard does say a check was written but doesn't acknowledge that it was actually cashed. You have to call Vanguard and have them check for you. The US mail service in some areas has been unreliable and a lost check in the mail can be a real problem if you don't know it happened.

If I write the check myself from a Money Market fund in a IRA, Vanguard does document when that check is actually cashed.

Ed
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GerryL
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Re: Can anyone help me find a solution to my QCD problem?

Post by GerryL »

Parthenon wrote: Thu Sep 23, 2021 12:06 pm
TheGreyingDuke wrote: Thu Sep 23, 2021 8:06 am A point of minor relevance...

I have Vanguard write the checks,send them to me and then I send them off. I can go to the Vanguard site and there is clear documentation that the check was written to "The ABC Charity". Making a copy before sending it off is not a bad idea, but if you neglect to do that there is this backup.
What I don't care for when Vanguard writes the check and sends it to me is I have no way of knowing if the charity actually receives and cashes the check once I send it to them. The documentation at Vanguard does say a check was written but doesn't acknowledge that it was actually cashed. You have to call Vanguard and have them check for you. The US mail service in some areas has been unreliable and a lost check in the mail can be a real problem if you don't know it happened.

If I write the check myself from a Money Market fund in a IRA, Vanguard does document when that check is actually cashed.

Ed
I include a cover letter with the check asking that they promptly send me an acknowledgement. Of course, the "carrot" is that I need the acknowledgement so I can submit a request for a matching grant from my former employer. In fact, I recommend that they email me a PDF, to make the process quicker.

I also scan the cover letter with the check as a form of documentation for my own records. And for my memory.
Last edited by GerryL on Thu Sep 23, 2021 12:35 pm, edited 1 time in total.
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GerryL
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Re: Can anyone help me find a solution to my QCD problem?

Post by GerryL »

celia wrote: Wed Sep 22, 2021 1:50 pm
privateID wrote: Wed Sep 22, 2021 11:56 am If you do all the QCDs at Vanguard on one day, do you get all the checks on the same day in the mail? I assume you would, but just want to verify that.
Likely yes, unless you do them at different times of the day or near market closing. We do ours in the evenings after things quiet down at Vanguard.
Of course, it is up to your local post office, but if you sit down and submit a series of QCD check requests, they are likely to come in the same mail delivery. That has been my experience. Vanguard does not check the eligibility of the charity -- that's on you -- so there is no interim step that would hold up the process.
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

Parthenon wrote: Thu Sep 23, 2021 12:06 pm
TheGreyingDuke wrote: Thu Sep 23, 2021 8:06 am A point of minor relevance...

I have Vanguard write the checks,send them to me and then I send them off. I can go to the Vanguard site and there is clear documentation that the check was written to "The ABC Charity". Making a copy before sending it off is not a bad idea, but if you neglect to do that there is this backup.
What I don't care for when Vanguard writes the check and sends it to me is I have no way of knowing if the charity actually receives and cashes the check once I send it to them. The documentation at Vanguard does say a check was written but doesn't acknowledge that it was actually cashed. You have to call Vanguard and have them check for you. The US mail service in some areas has been unreliable and a lost check in the mail can be a real problem if you don't know it happened.

If I write the check myself from a Money Market fund in a IRA, Vanguard does document when that check is actually cashed.

Ed
That concerns me as well. The way I handle it is to keep track of what I send, and make sure I get an acknowledgement letter. One time I did not get one, so I called Vanguard and asked if the check was ever cashed. They told me it had not been cashed, so they stopped payment on the first check and sent me a replacement.
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Re: Can anyone help me find a solution to my QCD problem?

Post by tomd37 »

I have been doing QCDs from my VG account for the past thirteen years. Each year I do my twelve requests online one after the other on one evening. The checks are sent to me individually and they all were mailed by VG and arrived at the same time. I have a standard cover letter to the charities that accompanies each check and contains the statement "Please provide written acknowledgement of the receipt of this donation in a timely manner in accordance with Internal Revenue Service guidelines". I retain a copy of the check and the letter to each charity. My responses from the charities usually comes within a month depending on their staffing situation. Last year because of the COVID situation in April the responses were a bit slower, but they all were received.

I do include my name, address, and telephone number in the cover letter. Last year one check was misdelivered by the USPS to a different post office box. The recipient mistakenly opened the envelope, realized the mistake, and called me. It was in the immediate area of the charity so I went and picked it up and hand delivered the check to the charity. It was a bit concerning to me as it was a $1,500 check.
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Re: Can anyone help me find a solution to my QCD problem?

Post by FreddieFIRE »

Is VG really smart enough to recognize that a check from an IRA was written to a 501c3 and to exclude that distribution (as taxable) from the 1099 issued for the year? I'm sensing a problem when the taxable distribution amount on a 1040 doesn't align with the taxable distribution reported by VG on the 1099.
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tomd37
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Re: Can anyone help me find a solution to my QCD problem?

Post by tomd37 »

Vanguard doesn't know or care about the payee on the check. That is your responsibility. They will report the total amount of your distributions on the 1099-R they issue. It is up to you to properly report the distribution on 1040 lines 4a and 4b, with the total amount on 4a, taxable amount on 4b, and the proper notation "QCD" in front of line 4b.
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Re: Can anyone help me find a solution to my QCD problem?

Post by drzzzzz »

Sheepdog wrote: Thu Sep 23, 2021 8:57 am
drzzzzz wrote: Thu Sep 23, 2021 7:36 am You can write the check from an IRA for any amount in contrast to some other accounts at Vanguard that have branded on the check a $250 minimum.
Would you please expand this comment when you say "You can write a check from an IRA for any amount ...........' My IRA checks state "NOT VALID FOR LESS THAN $250.00"
Are you on a brokerage account or the older mutual fund account - maybe that is the difference? Our checks for the IRA (which is on their brokerage platform) do not have the "Not Valid for less than $250". If makes zero sense to even have that verbiage on an IRA check - it's possible your RMD could be less than that for example. We have written checks for as little as $18 and many for $100.
Last edited by drzzzzz on Thu Sep 23, 2021 3:08 pm, edited 1 time in total.
sport
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Re: Can anyone help me find a solution to my QCD problem?

Post by sport »

tomd37 wrote: Thu Sep 23, 2021 2:20 pm Vanguard doesn't know or care about the payee on the check. That is your responsibility. They will report the total amount of your distributions on the 1099-R they issue. It is up to you to properly report the distribution on 1040 lines 4a and 4b, with the total amount on 4a, taxable amount on 4b, and the proper notation "QCD" in front of line 4b.
This is correct. All QCDs are lumped together with other distributions on the 1099R. They are categorized as "ordinary distributions".
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celia
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Re: Can anyone help me find a solution to my QCD problem?

Post by celia »

Parthenon wrote: Thu Sep 23, 2021 12:06 pm What I don't care for when Vanguard writes the check and sends it to me is I have no way of knowing if the charity actually receives and cashes the check once I send it to them. The documentation at Vanguard does say a check was written but doesn't acknowledge that it was actually cashed.
When you send out a QCD check, you should request an immediate acknowledgement. They aren’t obligated to acknowdge donations under $250 (probably because it would use up valuable resources for small charities) and have until January after the tax year closes to do it.

https://www.irs.gov/charities-non-profi ... wledgments

I’ve been the treasurer of a small local charity and we tried to acknowdge these donations soon after they were received and again after the year ended. We figured it made sense to remind donors of the good that we do, in hopes they donate again.

Another way to know that the check was cashed is to request it in the early months each year. At Vanguard, they then notify you at 180 days that the check hasn’t been cashed yet. Then you have time to look into it or have the check replaced. When they notify you, they also let you know it will be sent to unclaimed property, if you don’t take care of it. At unclaimed property, I have no idea if the charity or you will be listed as the owner of the property. Probably the charity, I imagine.
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Re: Can anyone help me find a solution to my QCD problem?

Post by InMyDreams »

privateID wrote: Wed Sep 22, 2021 1:30 pm
I get that, but the guy on the phone specifically said that I couldn't do it like that.
From Forbes:
For a charitable distribution from an IRA to qualify as a QCD, the charitable contribution must be made directly from the IRA custodian or trustee to the charity. If you receive a distribution from the IRA and later make a contribution to charity, that doesn’t count as a QCD. That distribution will be included in gross income.

As an alternative, the IRA custodian can give you a check that is payable to the charity, and you can deliver that check to the charity. Your IRA custodian also might provide you with a checkbook. You can write a check against the IRA directly to a charity. Either of these actions will count as a QCD.


https://www.forbes.com/sites/bobcarlson ... e77f197a74

Also:
QCDs can be made only to public charities that are eligible for charitable contribution deductions under the regular IRS rules. Gifts to private foundations and donor-advised funds or that are used to fund charitable gift annuities aren’t eligible for QCDs.



I sympathize, tho, with the check coming from institution to the IRA holder. We had that problem with my father, plus had the wrong address for the institution. Oh, my it went on for quite a while.

You might sign up for the USPS notification system. We hadn't done that at the time, but it could give you a heads up about when you need to do your intercept.
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privateID
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Re: Can anyone help me find a solution to my QCD problem?

Post by privateID »

InMyDreams wrote: Thu Sep 23, 2021 3:45 pm
privateID wrote: Wed Sep 22, 2021 1:30 pm
I get that, but the guy on the phone specifically said that I couldn't do it like that.
From Forbes:
For a charitable distribution from an IRA to qualify as a QCD, the charitable contribution must be made directly from the IRA custodian or trustee to the charity. If you receive a distribution from the IRA and later make a contribution to charity, that doesn’t count as a QCD. That distribution will be included in gross income.

As an alternative, the IRA custodian can give you a check that is payable to the charity, and you can deliver that check to the charity. Your IRA custodian also might provide you with a checkbook. You can write a check against the IRA directly to a charity. Either of these actions will count as a QCD.


https://www.forbes.com/sites/bobcarlson ... e77f197a74

Also:
QCDs can be made only to public charities that are eligible for charitable contribution deductions under the regular IRS rules. Gifts to private foundations and donor-advised funds or that are used to fund charitable gift annuities aren’t eligible for QCDs.



I sympathize, tho, with the check coming from institution to the IRA holder. We had that problem with my father, plus had the wrong address for the institution. Oh, my it went on for quite a while.

You might sign up for the USPS notification system. We hadn't done that at the time, but it could give you a heads up about when you need to do your intercept.
It seems that everyone here agrees that simply writing a check against the IRA account is sufficient to be eligible as a QCD. I therefore repeat the same question - Why did the Vanguard representative on the phone specifically say that I couldn't do it like that?
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