electronic 401K contribution

[cgjsmith]

Not sure if this is in the right place or not but I have a couple of people wanting to directly deposit from their 401K, I am not even sure how that is possible. Or if it is possible. I assume once it goes into the bank it would be posted as a regular deposit. Does anyone else have members of their church do this if so how do you do it. Thanks Crystal

[sgbani]

So, what I am reading is that some members want to donate directly from their 401k, and that such a transaction would be done electronically.

Do you currently process / accept electronic donations / online giving, or is just cash/check?

If the donor is pushing the money electronically, they would need to know the routing number and account number for the church's bank account.
Or, the 401k company may request such information.
I am not sure if you have any financial policies about giving out such information.

If the donor's 401k company will initiate the electronic transaction, and you provide them with the routing/account info, the deposit will show up, yes.
The donor should provide a written statement indicating the amount, approximate date of transaction, and any designations.

Then, in the contribution module, you can enter it as a regular donation, but perhaps with a donation type of 'online' or 'electronic'.
reconciling / balancing at end of month would be no different.

You could always ask them if the 401k company can send a check instead.
(If the donor is expecting YOU to initiate the withdrawal, that is a different issue and may not be possible.)

Lastly, and this is only my understanding, and you should check yourself the rules and/or tax professionals: distributions from a 401k are not considered QCD (qualified charitable donations). only donations directly from IRA's could be considered QCD's, as long as other metrics are met properly.
Not sure if these individuals are eligible to use the QCD method, but something you should be aware of when discussing donations directly from a trustee of funds (the 401k company).
A regular, deductible donation from the 401k would be okay, but a 'QCD' style donation from a 401k is not allowable. Therefore, when receiving such donations, they would not be treated as a QCD (unlike other possible donations directly from other IRA accounts).

[NeilZ]

Not sure if this is in the right place or not but I have a couple of people wanting to directly deposit from their 401K, I am not even sure how that is possible. Or if it is possible. I assume once it goes into the bank it would be posted as a regular deposit. Does anyone else have members of their church do this if so how do you do it. Thanks Crystal

Hi Crystal,

Its a simple EFT transaction, very possible depending on your bank, and if you want to give out your bank's routing and account numbers. Frankly, that is not something I would do, as sgbani suggested above, I would rather then 401k send a check. However, that's up to your church's finance committee.

However, you would treat EFT deposit this like any other contribution, however, I would enter and post it separately from the normal contributions as it would probably be seen as an individual deposit to your bank. If you don't have an EFT Contribution type code setup, I would add it to that list and use that code when you enter the contribution. This would help it stand out from the normal cash/check/online contributions.

As far as the Qualified Charitable Distribution the church does not have to decide whether or not this donation should show up on the end of year giving statement. Its not a tax consultant, that determination is made by the donor. Whether or not taxes are taken when the distribution is made is not known by the church. So just enter it as a normal contribution.

[cgjsmith]

Thank you, I'll talk to my pastor and see what he is comfortable doing. Crystal