NFCU Processes IRA Charitable Distributions From IRA Account To Your Personal Savings Account Then Issues Check Or Wire Transfer To Charity

choice1 | Sep 5, 2023 | 372 posts since 2023

What do you think of this …not disclosed until weeks after check issued from savings account to charity…still a direct transfer? Good luck!

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happyharold4 | Sep 7, 2023 | 393 posts since 2022

Ira distributions can be complicated. I don't see a problem with what you posted, just one extra step. One of the FI's I have Ira with, I have to fax the request. then they make the check out to to Recipients name and mail the check to me and I then have to mail the check to the Recipient. Plus their time frame for processing is awful. I have it locked in a CD so I live with it.

choice1 | Sep 8, 2023 | 372 posts since 2023

Your response is welcomed and enlightening…Let me expand…for a charitable IRA distribution from NFCU and you request the check be payable to the charity…the paperwork is very clear. However NFCU cannot issue a check from an IRA account ergo what does it do? It moves the requested charitable amount to your membership/savings account, ie a non-IRA account, and then issues a check from a non-IRA account. The result is …IRA distribution to your non IRA account, ie a taxable distribution and the check is issued against that nonIRA account to the charity

Wrong!

bobert456 | Sep 8, 2023 | 187 posts since 2022

As you described it, it looks like your IRA distribution (taxable) to your share, then donated to the charity. QCD must be directly from the custodian to the charity without you in the middle. KEEP ALL YOUR INSTRUCTIONS to NFCU. If the IRS does not allow it, you may be able to declare damages to NFCU. Good Luck.

CuriousDave | Sep 9, 2023 | 233 posts since 2018

Ever since QCDs were first allowed (around 2007) I have had Alliant CU withdraw funds from my IRA savings account and write checks to the charities of my choice. They mail the checks to me and I forward them to the applicable charities. IRS Notice 2007- 7 includes guidance on QCDs in the form of Q&As. One of them, Q41, clearly indicates that checks written by the IRA custodian to qualifying charities will qualify as direct payments to the charities from the IRA account if the IRA owner receives the checks and forwards them to the applicable charitable organizations. I do that because the checks are imprinted with only Alliant’s name and do not include my or my IRA’s name as the donor and do not indicate that they are for QCDs, so I have had to include a handwritten note with each donation to ensure that the charity sends its receipt to me as donor. The IRS does not require that the payment by the IRA custodian be made directly from an IRA account to qualify as a QCD, only that the custodian’s checks are to be written to charitable organizations and not to the IRA owner. In January each year, Alliant issues a Form 1099-R for all IRA distributions for the preceding year that include the QCDs but does not segregate or identify the QCDs. The tax software I use includes a field in which each QCD is entered so that the aggregated QCDs are “backed out” on the tax return.

choice1 | Sep 8, 2023 | 372 posts since 2023

And one does not know this until month end when statement showing IRA transfer to nonIRA savings account and same day out (but not labeled as IRA on outgoing). First they didn’t follow directions but transferred out $s from an account w/o any authorization. Problem is distribution and trustee to trustee transactions by check

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