Published April 9, 2020
Information on the Coronavirus Aid, Relief, and Economic Security Act (2020)
On March 27, in response to the economic strain of the coronavirus pandemic and the social policies intended to halt its impact, Congress passed and the president signed into law the Coronavirus Aid, Relief, and Economic Security Act, or CARES. A component of the temporary legislation is intended to enhance charitable giving and suspend certain requirements and restrictions on qualified retirement assets.
Please be aware of the following changes for 2020 and consult your financial, legal, and tax advisers before taking action. The Office of Estate and Gift Planning at Rutgers University Foundation can provide specific guidance based on your situation. Please contact us at 848-932-2245 or firstname.lastname@example.org.
Charitable Contribution Limits for Individuals
The charitable deduction limit for cash contributions by individuals in 2020 has been suspended, allowing a donor to deduct cash charitable contributions up to 100 percent of adjusted gross income (AGI). The prior limitation was 60 percent of AGI. Gifts to donor-advised funds are excluded. The five-year carryover applies to contributions in excess of AGI, but in subsequent years the then-applicable deduction limit applies.
The 100 percent of AGI limit is not automatic; you must elect to make the deduction on your 2020 tax return, so consult with your advisers before filing your return.
Required Minimum Distributions
Required minimum distributions (for people 72 years of age and older) from IRAs and other qualified retirement accounts are suspended for 2020. The qualified charitable distribution (IRA charitable rollover) is still available for those 70.5 years of age and older up to $100,000.
Additionally, due to the suspension of the charitable deduction limit for cash contributions in 2020, a donor 59.5 years of age and older may take a distribution in any amount from an IRA, claim the income, and then make a charitable contribution that eliminates the income tax liability.
Waiver of Retirement Plan Penalties Related to COVID-19
Exceptions have been provided for early, penalty-free withdrawals from qualified retirement plans for COVID-19-related expenses (up to $100,000). There are specific requirements, so donors should seek advice from financial, legal, or tax advisers before taking distributions. The waiver applies to those younger than 59.5 years of age.
The charitable deduction limit for cash contributions by corporations in 2020 has been increased to 25 percent of taxable income, up from 10 percent in prior years.
Donors who do not itemize may exclude up to $300 in cash charitable contributions from their adjusted gross income in 2020, therefore avoiding income tax on those contributions. Donor-advised funds are excluded.
The information on this page is intended to provide general guidance on charitable gift planning. It is not intended as legal or tax advice and should not be relied upon as such. For advice or assistance with your particular situation, consult an attorney or other professional adviser.
For more information, you can contact the Office of Estate and Gift Planning by email: email@example.com, phone: 848-932-2245, or by visiting their website: giftplans.rutgers.edu/.
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