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YE contributions

  • 1.  YE contributions

    Posted 7 days ago

    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.



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    Susan Zavala
    Senior Manager, Donor Services
    Memorial Sloan Kettering Cancer Center
    zavalas@mskcc.org
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  • 2.  RE: YE contributions

    Posted 7 days ago

    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.  



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    Jeff Baynham
    Associate Vice Chancellor, Advancement Services
    NC State University
    jtbaynha@ncsu.edu
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  • 3.  RE: YE contributions

    Posted 4 days ago

    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.

     

     

     






  • 4.  RE: YE contributions

    Posted 4 days ago
    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

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