FundSvcs Community

 View Only

  • 1.  YE contributions

    Posted 11-18-2022 04:16 PM

    If an IRA contribution is postmarked December yet deposited in January should it be attributed to the new year? Consequently, if a regular check contribution is postmarked December and deposited in January will that qualify for a 2022 receipt? If both are yes, I'd like to understand why the difference.



    ------------------------------
    Susan Zavala
    Senior Manager, Donor Services
    Memorial Sloan Kettering Cancer Center
    zavalas@mskcc.org
    ------------------------------


  • 2.  RE: YE contributions

    Posted 11-18-2022 04:32 PM

    We just tell the donor when we processed the gift. We don't give them an IRS gift date (and that isn't required by IRS 1771). Heck, some postmarks are so fuzzy (or missing entirely) that you can't use them.  



    ------------------------------
    Jeff Baynham
    Associate Vice Chancellor, Advancement Services
    NC State University
    jtbaynha@ncsu.edu
    ------------------------------

    Original Message


  • 3.  RE: YE contributions

    Posted 11-21-2022 09:35 AM

    Hi Susan,

    For Qualified Charitable Distributions from an IRA, the key difference is not driven by how the postmark date translates into your system. For donors making a donation from the IRA, the IRA custodian will send the IRS a 1099-R and the reported date of the distribution will be the date the funds actually left the IRA. The date you use in your system and in a gift receipt will be irrelevant in the eyes of the IRS. This could be particularly troublesome if a person has an IRA checkbook, writes a check, and you get it on the last few days of the year, or first days of the new year, because the funds likely won't leave the IRA account until the new year.

     

    Since penalties for not taking a Required Minimum Distribution are very steep, it's a good idea to have as part of your year-end appeal, an advisory related to this with guidance on when to get IRA distribution checks to you to ensure the funds clear, by December 31st.

     

    Hope that helps,

     

    John Smilde

    Director of Gifts and Records Administration

    Advancement and Alumni Relations

    George Mason University

    4400 University Drive, MSN 1A3

    Fairfax, VA 22030

    703.993.8680

    jsmilde@gmu.edu

     

    This electronic message contains confidential information which is, in whole or in part,

    subject to exclusion from disclosure under the Freedom of Information Act pursuant to

    §2.2-3705.4.7. of the Code of Virginia.

     

     

     




    Original Message


  • 4.  RE: YE contributions

    Posted 01-09-2023 11:43 AM

    Hi John,

    This information is incredibly helpful, as we have never encountered this situation until this year. I was unaware of the requirement that the funds need to have been moved from one account to the other for the donation to count in that current year.  Can you tell me if this is a new requirement?  

    Thanks so much!

    Shea



    ------------------------------
    Shea Sadler
    Sr. Director, Advancement Information & Analytics
    University of South Alabama
    ssadler@southalabama.edu
    ------------------------------

    Original Message


  • 5.  RE: YE contributions

    Posted 01-09-2023 11:48 AM
    This only pertains to these IRA contributions as John discussed. I believe this has been the rule since the Pension Protection Act was passed in 2006.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 6.  RE: YE contributions

    Posted 01-09-2023 12:22 PM
    Yes, I understood that.  Thanks, for the clarification, though.

    We have just never received a personal check with the IRA Rollover embossed on it, and didn't realize it had to clear the bank. I work for a University and we came in on the 31st, but it seems that wouldn't have helped since it couldn't have been deposited.  We will need to adjust our procedures. Thank you so much for your insight.  I don't know how I've missed this in the last 15 years.  I am always learning something new, and so very grateful for this forum!

    ------------------------------
    Shea Sadler
    Sr. Director, Advancement Information & Analytics
    University of South Alabama
    ssadler@southalabama.edu
    ------------------------------

    Original Message


  • 7.  RE: YE contributions

    Posted 01-09-2023 12:33 PM
    For the future, I suggest you coordinate with your Business Office for end-of-year processing. If your office cannot perform RDC, certainly your Business Office can. Thus, you could both come in on the 31st and knock these gifts out!

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 8.  RE: YE contributions

    Posted 11-21-2022 11:25 AM
    There are (at least) three different issues here: when you record the gift in your donor system, when your business office records the gift, and when the donor records the gift. The donor's timing and your business office's timing are both governed by accounting rules. For a normal gift by check, the donor's timing is the day the check was put in the mail (the "mailbox  rule"), and the business office's timing is the day the check was received (even if not deposited on that date). The timing in the donor system, on the other hand, is not mandated by any law or accounting practices. Using the date of gift processing is one approach with many benefits, but other approaches, e.g. same date as accounting uses, are also used.

    For a QCD, the donor's timing is different. First, the distribution must be made by the trustee, and the donor's instruction is not itself an unqualified making of payment, it's a request to the trustee, who holds the legal authority to make the payment. 

    Second, the donor's interest isn't really the legal gift date from an accounting perspective, it's whether the timing of the distribution matches the IRS rule for RMDs. Per IRS Pub 509b (and other IRS pubs), the IRA owner "must receive at least minimum amount for each year" (emphasis mine). While a QCD doesn't go to the IRA donor at all, it is still an RMD, and follows the same timing rule - the money must be received by the recipient to satisfy the RMD rule. Thus, it may be that the legal date of a transaction is Dec 01, b/c that's when the trustee sent the check to the charity. But the IRS requires a distribution to be received by Dec 31 - for the money to move from one account to the other. If that check is deposited Jan 3rd, it's too late. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




    Original Message


Related Content