Year End Giving
With the new tax reform law in place, the ability of your donors age 70.5 and older to donate the distribution from their Individual Retirement Accounts (IRAs) to charity has been made permanent. This is good news. Previously the provision was tenuous and had to be renewed every year. Let me explain.
The donor’s required minimum distribution is the minimum amount that he or she must withdraw from their account each year. The IRA holder generally must start taking withdrawals from their IRA, SEP IRA, SIMPLE IRA, or retirement plan account when age 70.5 is reached. However, Roth IRAs do not require withdrawals until after the death of the owner. The IRS has a very nice page with these details.
Your 70.5 and older donors who have IRA’s are obligated to take a “required minimum distribution” each year. When they receive those funds, it’s a taxable event for them. To avoid paying that tax they can donate the distribution in part or in whole to your nonprofit.
Be sure to let your donors know the following:
Since competition for donor giving is intense at year-end, it’s best if you get an early message out to your donors age 70.5 and older sooner rather than later. Your letters should be followed by a phone call to talk over the details with them. If you don’t know the age of your donors, you can email me for how to fix that problem.
Lastly, your letter and email to your targeted donors, should share this Kiplinger calculator link so that your donors can easily compute their mandatory minimum distributions from a traditional IRA, which starts when you hit age 70 1/2. To use the calculator, donors need only input their age at the end of 2018 and the total balance of their traditional IRA accounts as of December 31, 2017. Balances from Roth IRAs should not be included as they do not have a required minimum distribution.
By focusing on donors age 70.5 and older, you will boost your year-end giving.
Please feel free to use the content of this post without attribution with your donors.
I welcome your questions and the opportunity to learn from your experience. Please contact me.