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DerbyDad03 DerbyDad03 is offline
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Default OT: House Offer Accepted. What A Crazy Market!

On Wednesday, May 12, 2021 at 8:01:45 AM UTC-4, dpb wrote:
On 5/11/2021 11:17 PM, DerbyDad03 wrote:
On Tuesday, May 11, 2021 at 8:58:40 PM UTC-4, dpb wrote:

...
It's especially easy if your IRA is set up with check-writing
privileges-- you can write the check yourself rather than have the
holder of the IRA do it for you.


Sure, you can write the check, but you better have cash in your IRA or
the ability to raise cash on your own. Some firms allow client trading
in IRA's, some don't.

Well, if you are one who doesn't keep track of and ensure the cash is
where you want it, then yes, Virginia, this option is probably not for
you...


Just pointing possible issues for the uninformed. These subtleties may be
obvious to some folks, but I'm sure you can see from this discussion that the
level of knowledge varies.

My comments weren't addressed directly at you, but your "teaching moment"
check writing comment opened the door for another teaching moment that
added some details for folks to be aware of. We're both just trying to help.

Having a checkbook associated with a basic checking account is very
different than having a checkbook associated with an IRA. The balance
shown in a basic checking account is all cash. You either have enough
cash in the account to cover the check or you don't. "The balance in my
checking account is $10K. My $5K check will be covered."

In the IRA situation, I can certainly see a certain segment of IRA's owners
saying "The balance in my IRA is $50K. My $5K check will be covered."
Unless $5K of the $50K is in cash, the check will bounce. The writing of
the check is not (at least in my experience) going to trigger a trade to cover
it. Some folks might not make that distinction.

I'd wager that if you asked a bunch of random IRA owners if they are allowed
to have a checkbook for their IRA account, many, if not most, wouldn't be sure.
Then ask them if they know how it would work with regard to having cash
available, how withholding taxes are handled, on what date the distribution
is recorded, etc. and I'd wager that most would not be able to answer those
questions.

The main drawback is the inability to control when the cash is withdrawn.
The distribution doesn't happen until the "personal" check is deposited by
the charity. If the custodian issues the check, the distribution occurs on
the day the check is issued.

Worst case is you decide to do a QCD as your RMD late in the year and the
charity holds your check until January. Technically you would be on the hook
for a IRS penalty of 50% of the RMD because you never really took your RMD
for the previous year. You could probably get out of it, but it would take some
work. I'm just saying that letting the custodian issue the check eliminates that
issue.

...

Find a better-managed charity to which to donate and/or don't wait until
the last minute...


By the time you find out that your check wasn't cashed in what you might
consider a timely manner, it's a little late to find a "better-managed charity",
at least for that year. By that time, the harm has been done.

Or, the check writer might think that the distribution is recorded based
on the date that they put on the check or maybe the postmark date on the
envelope. Those are not unreasonable assumptions to make, but it's not
how it works in the QCD world.

Assuming that you deal one-on-one with donors in your capacity as
President of the local community college foundation, I'm sure that you
have had to hold their hands on occasion as they navigate the complexity
of the chartable donation arena. Even the richest, most knowledgeable
business people often need some help. That's all I'm trying to do for those
following this thread.