Federal relief package contains changes to charitable giving and retirement plan provisions

By Alison O’Carroll, director and philanthropic counsel

On Friday, March 27, President Trump signed the third COVID-19 relief package, HR 748 – The Coronavirus Aid, Relief, & Economic Security (CARES) Act. The scope of the over $2 trillion aid package is far-reaching. Within its 880 pages are some provisions of particular interest to those in the wealth planning and charitable giving communities. Here is a quick overview of those changes.

Very important note: the changes highlighted in the first three bullets apply only for cash gifts to public charities – donations to Donor-advised Funds (DAFs), supporting organizations (SOs), and private foundations do NOT qualify.

Individual giving

• Non-itemizers can now deduct up to $300 in cash charitable contributions in 2020 (and possibly beyond), in addition to claiming the standard deduction.
• For those who itemize in 2020, the cap on annual giving for gifts of cash increased from 60% of adjusted gross income (AGI) to 100% of AGI. A donor who uses all of his available deduction for qualified gifts would pay no federal income tax in 2020!

Corporate giving

• The limitation on deductions for cash contributions in 2020 increases from 10% to 25% of taxable income.
• The limitation on deductions for contributions of food inventory in 2020 increases from 15% to 25% of taxable income.

Retirement plan changes

• Required minimum distributions (RMDs) are suspended in most instances for 2020.
• The deadline for making a 2019 contribution to an IRA is extended to July 15, 2020.
• The 10% penalty for early distributions from qualified retirement plans, including IRAs and 401(k)s, is waived for up to $100,000. Must be coronavirus-related distributions taken in 2020.

If you have any questions about these changes, please feel free to contact me directly at 404.333.0241 or aocarroll@cfgreateratlanta.org.