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Important Tax and Charitable Planning Updates: CARES Act and SECURE Act – 2020


CARES ACT of 2020: Special Opportunities for Charitable Planning in 2020 

  • For those who use the standard deduction, an above-the-line reduction of income for gifts to charity up to $300.00 ($600.00 if filing jointly). 
  • For those who intend to itemize deductions, an unlimited deduction of cash gifts to charity up to 100% of Adjusted Gross Income (AGI). Prior law limited deducting cash gifts to charity to not more than 60% of AGI (with carryovers). 
  • Contributions in 2020 to establish charitable gift annuities or to fund charitable remainder trusts will be eligible for deduction up to 100% of AGI for itemizers. 
SECURE ACT of 2020: Dealing with the New Retirement Account 10-year Distribution Rules​
  • Inherited retirement account distributions must now be taken within 10 years. Can no longer stretch out the withdrawals and required tax payments on each distribution over the beneficiary's life expectancy.
  • For those who wish to leave retirement plan assets to children, a charitable remainder trust ought to be considered. The IRA/401(k) assets would be transferred to the trust after the owner's lifetime. Annual lifetime annuity amounts will be made payable to beneficiaries at a qualified fixed lifetime/s rate. Payments will be taxed to the beneficiaries annually.Some of the annual payments may be tax-preferred. 
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