Year End Giving Considerations: Peak 2020 Giving Season Has Arrived
The SECURE Act, passed in 2019, and the CARES Act, passed this year for COVID-19 relief, may provide incentives for your clients to increase their charitable giving in 2020 and to revisit their charitable giving plan.
Among its many provisions, in some circumstances, the CARES Act increased the cash donation limit of 60% of AGI to 100%. This increase is only for gifts in 2020. This deduction is not available for cash gifts to donor advised funds or supporting organizations; however, it provides a considerable benefit for certain cash-rich donors.
Among its many provisions, the SECURE Act essentially eliminated the “stretch IRA”. In short, previously, on the death of IRA account holders, most beneficiaries would be able to “stretch” the required IRA withdrawals over their lifetime. This allowed family members to receive the IRAs, take small distributions initially, and grow the accounts over time. The SECURE Act now requires such beneficiaries to complete the withdrawals in just 10 years.
With a bit of additional planning, your charitably inclined clients may avoid realizing deferred income tax and may avoid potential estate taxes. If you or your professional advisor have questions or need more information, please contact Katie Knapp at firstname.lastname@example.org.