CARES Act Impact – RMD Waived in 2020

The inclusion of an expanded charitable giving incentive in the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a critical acknowledgement by Congress that the work of nonprofits like the FPTR are essential services. It is the first time Congress has passed this type of giving incentive in response to disaster or national emergency.

Required Min. Distributions (RMD) Waived in 2020 for Most Donors: Required minimum distributions (RMD) that would have had to start in 2020 do not have to start until 2021, including distributions from defined benefit pension plans and 457 plans. Even so, making a qualified charitable distribution (QCD) this year will still allow itemizers and non-itemizers alike to direct up to $100,000 from their IRA to charities in a tax efficient manner.

How it Works
RMD for individuals over age 70 ½ are suspended until 2021. This includes distributions from defined benefit pension plans and 457 plans. The RMD is an attractive way for donors to make a significant charitable gift directly from their IRA to a charity through a qualified charitable contribution (QCD) while avoiding taxable income. However, the tax benefit of the qualified charitable distribution (QCD) remains.

The Takeaway
Donors directing a QCD to charity this year (up to $100,000 per individual) will still reduce their taxable IRA balance. This allows all taxpayers, itemizers and non-itemizers alike, to direct gifts from their IRA to charities in a tax efficient manner.

For more information, please contact our Director of Development at ericasadiq@foundation4pt.org.

This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.