The information provided below is not intended to serve as tax or legal advice. Please consult your attorney and/or financial advisor before making a gift. Contributions to the United States Holocaust Memorial Museum are eligible for the maximum income and estate tax charitable deductions available for gifts to a public charity.
If you have questions about the impact of the SECURE or CARES Acts on your retirement plans, be sure to contact your financial advisor. They can review the plans you have in place (including your beneficiary designations) and help make sure you are still on the right track.
SECURE Act (Setting Every Community Up for Retirement Enhancement Act)
In effect as of January 1, 2020, the SECURE Act changes certain rules on funding retirement savings. Passed as part of a spending bill, the SECURE Act brought with it significant changes to retirement plans. While some changes may impact you, others could impact the people you name as beneficiaries.
- You can contribute to your IRA for a longer period. Previously, you could not contribute to your IRA after reaching the age of 70½. However, more and more people are working past that age. The SECURE Act repeals this age limitation for working Americans, allowing you more time to save.
- The Required Minimum Distribution (RMD) age changed. The SECURE Act increased the age at which you must start taking RMDs from your retirement accounts from 70½ to 72 for those who were born July 1, 1949, or later. This change allows you additional time to grow the funds in your account before you have to start withdrawing. (Note: The RMD requirement has been waived for 2020, per the CARES Act, which took effect on March 27, 2020.)
- IRA beneficiary rules have changed. Prior to the SECURE Act, IRA beneficiaries could take distributions throughout their lives. This offered tax savings for the beneficiary. The SECURE Act preserved this option for beneficiaries who are spouses, but repealed it for non-spousal IRA beneficiaries (with other limited exceptions). Those non-spousal beneficiaries will now have 10 years to withdraw the entire amount. Click here to read about how to name the Museum as a beneficiary of your retirement assets.
If you’re 70½ or older, you can still make a tax-free gift directly to a qualified charitable organization. You can transfer any amount up to $100,000 per year ($200,000 per couple) directly to a qualified charitable organization without paying income tax on the distribution. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions. Your gift will also support the Museum’s vital work today, allowing you to see the difference you’re making.
Contact Planned Giving and Endowments
The Museum is happy to work with you to fulfill your philanthropic goals. Contact us to arrange a confidential conversation.
CARES Act (Coronavirus Aid, Relief, and Economic Security Act)
The CARES Act, which became law on March 27, 2020, included a number of provisions that could impact charitable giving.
Elimination of Ceiling on Deductibility of Charitable Donations for Individuals in 2020
Before the CARES Act
The usual cap–60% of adjusted gross income (AGI)–on annual deductions for cash donations by individuals who itemize applied for 2020 (with a 5-year carry-forward for unused portions). For example, taxpayers with $500,000 in AGI making cash gifts of $500,000 to a qualified charity would have had their charitable deduction capped at $300,000; the remaining $200,000 in unused deductions would have been eligible for the 5-year carry-forward.
Under the CARES Act
In 2020 only, that same individual could now fully offset their $500,000 of AGI with the $500,000 deduction for their cash gifts to a qualified charity (which excludes donor advised funds, private foundations, and supporting organizations) and could therefore owe no federal income tax in 2020. For donors who are in a position to do so, this provides them with an excellent opportunity to consider accelerating any outstanding charitable pledge payments or to make new gifts.
Increase in Ceiling on Deductibility of Charitable Donations for Corporations in 2020
The CARES Act also increases from 10% to 25% of AGI the limit on deductibility of corporate charitable donations.
The Suspension of the Required Minimum Distribution (RMD) for 2020
Waiver for 2020
For taxpayers who normally would be required to withdraw retirement assets, this annual RMD requirement has been suspended for 2020.
Potential Impact on Charitable Giving
Eliminates in 2020 only one of the benefits for those over 70-1/2 of making a Qualified Charitable Distribution (QCD) directly to the charity from an individual's IRA, as there is now no RMD requirement in 2020 against which a QCD could be applied, BUT the benefit of not including any QCD in a donor's taxable income remains in effect for 2020.
Deductibility ceiling of 100% of AGI, however, creates opportunity to donate to charity increased cash withdrawals from retirement funds and claim full offsetting charitable deduction.
Universal Deduction of $300 per “Tax-Filing Unit” for 2020
Every “tax-filing unit” that does not itemize can claim an “above the line” deduction of up to $300 in cash donations made in 2020 (excludes contributions made to donor advised funds, private foundations, and supporting organizations). For these purposes, the IRS has interpreted a “tax-filing unit” to mean either an individual, or a couple, as the case may be.