Last month, Justus Morgan presented to the Development Professionals of Southeast Wisconsin (representing dozens of local non-profit organizations) via Zoom about charitable giving tax updates. Download a one-page handout with an overview of important tax law changes & Justus’s three favorite charitable gift strategies you can use yet this year.

Click here to download the 2020 09 09 Planned Giving Tax Update handout

Planned Giving Tax Update 2020

SECURE Act (December 2019)
– Increases age to start Required Minimum Distributions from age 70.5 to 72
o Does NOT change age 70.5 for Qualified Charitable Distributions (QCD)
– Requires inherited retirement accounts (e.g. IRAs) to be distributed within 10 years after the date of death (with certain exceptions) versus previous law which typically was over the beneficiary’s lifetime
– Individuals with earned income over age 70.5 can now make Traditional IRA contributions (up to $7,000 for 2020)
o Future QCD’s must be reduced by Traditional IRA contributions made after age 70.5!

CARES Act (March 2020)
– $300 “Above the Line” deduction for cash donations for non-itemizers (excluding donor advised funds & supporting organizations under Section 509a3) in 2020
– Increase from 60% to 100% deduction for cash donations in 2020 with 5-year carryforward of unused deduction
– Waiver of Required Minimum Distributions for 2020

Planned Giving Strategies
– Qualified Charitable Distributions from IRAs (must be age 70.5 or older!)
o Distribution not treated as taxable income
o Distribution not included in Adjusted Gross Income (which affects taxation of Social Security benefits & other deductions/credits/taxes)
– Appreciated Stock or Mutual Funds (held for more than one year in nonretirement accounts)
o Avoids capital gains tax
– Retirement Account Beneficiary Designations
o Name charity on tax-deferred accounts & people on Roth or nonretirement assets

Recommended Posts