Important Information for IRA Donors

Please be aware of a potentially confusing and challenging situation regarding qualified charitable distributions (QCD) from an IRA made in December. 
 
An IRA charitable rollover allows individuals ages 70 ½ and older to make a sizable gift from their individual retirement account (IRA) to charity AND receive significant tax savings in return. Because of the popularity of this giving option, many IRA administrators have now created checkbooks for their clients to simplify the giving process.
 
However, IRS rules for these IRA checks vary significantly from other personal or business checks, and this creates a possible challenge.
 
In order for IRA checks to be counted as a QCD for the current tax year, they must be received AND PROCESSED by December 31.  This is especially important if your donor expects the gift to qualify as part of their required minimum distribution (RMD) for 2019.
 
This is much different than the well-known mailbox rule. Unlike other gifts, it is NOT enough that the check is postmarked or even hand-delivered by December 31. 
 
Any IRA gifts processed after December 31 will be counted as a distribution for 2020. Furthermore, your donors may incur a tax penalty if, as a result, they have not met their RMD for 2019.
 
What This Means for You…
Remind your donors to allow extra time when giving IRA gifts at the end-of-the-year. Consider sending a targeted email or even calling donors who are likely to give in this manner. You may wish to copy or share our recent blog article on this topic.
 
Keep an eye out for IRA checks. Sometimes these checks have “IRA” behind the donor’s name – but not always.  Another possible clue… If a check is written in an odd dollar amount this may indicate it’s a QCD. Make sure these gifts are moved to the top of the processing pile and cashed before December 31.
 
Notify your donors who miss the December 31 deadline. In spite of their good intentions and your best efforts, some donors may miss the end-of-the-year deadline unintentionally. Alert them right away, so they are not caught off guard when their gift is credited toward 2020. Guard your ongoing relationship with these donors through proactive communication.
As always, thank you for allowing Barnabas Foundation to serve alongside you in ministry!
 
If you have any further questions about IRA or other end-of-the-year gifts, please call us at 888.448.3040 or email Lynell Dykstra, ldyks@BarnabasFoundation.com.