CARES Act Signed into Law on March 27, 2020

The CARES ACT, officially named the “Coronavirus Aid, Relieve, and Economic Security Act,” was designed to rescue the economy from the impact of the coronavirus pandemic by funding health care needs as well as providing relief for individuals and businesses crippled by the pandemic. In addition, provisions have been included in the new law to motivate donors to continue to support their favorite charities that have been impacted by this pandemic.

Here is some pertinent information about the new law you may find helpful:

Taxpayers who do not itemize their deductions (estimated to be 85% of all taxpayers) will be able to claim a charitable deduction up to $300 as long as the donations were made in cash to a public charity in 2020.
For the year 2020, there will be no Required Minimum Distributions (RMD) from retirement plans, regardless of the age of the donor. This was intended for taxpayers who do not need to take a distribution to allow their retirement account to recover from the market decline.
Donors who have reached the age of 70½ are still permitted to make Qualified Charitable Distributions from their IRA up to $100,000 as under prior law.
Donors can deduct 100% of cash gifts to public charities as long as the total gifts do not exceed the donor’s adjusted gross income. Prior law had a 60% limit on the deduction.
Should an individual under the age of 59½ need to withdraw money from their retirement plan to cover expenses incurred by the individual or a family member related to treatment of COVID-19, the 10% penalty for pre-mature withdrawal will not apply and the taxation of the distribution can be spread over three years. You can add back the amount you withdraw to the retirement plan later without regard to contribution limits.

Charitable Gift Annuities (“CGAs”) Back on Center Stage

Due to the COVID-19 Pandemic and the impact on the US economy, the rates banks and other credit institutions are paying on deposits are tumbling to the lowest rates in decades. With a stock market that is anything but predictable, investors are looking to increase their fixed income portfolio. For our donors, there is a place to go to achieve fixed income of four to eight percent for life with the knowledge they are supporting future generations of Emma Willard School girls long after they have passed on.

Here’s how CGAs work in a nutshell:

Donor(s) transfers cash, appreciated securities or real estate to Emma Willard School (EWS) in return for EWS’ promise to pay the donor(s) a fixed income for life. The fixed income is determined based on the age of the donor(s) at the time they enter into the CGA.
Donor(s) avoids paying any capital gains tax on the appreciated securities or real estate transferred to EWS.
Donor(s) receives a significant charitable income tax deduction in the year they create the CGA.
A portion of the gift annuity payments the donor receives is tax-free.
Donor(s) can also enter into a CGA now and defer the time the fixed payments start to a later date further enhancing their annuity payments.

To receive a personal illustration of how a charitable gift annuity can benefit you and provide support for Emma Willard School, please contact me at 518-833-1831 or at jsise@emmawillard.org. Also, please visit our Gift Planning Website at www.emmawillard.org/planned-giving to learn more about charitable gift annuities and other planned gifts.