CARES Act / SECURE Act
Moody Bible Institute continues to move forward with its important work during these challenging times. In the midst of all that is going on, many of our friends and supporters are looking forward to the future when they can enjoy community with friends and resume their regular activities.
In response to the current situation, Congress recently enacted several tax law changes. Moody Bible Institute has created this page to offer helpful information related to these changes as you consider making a gift in support of our mission during this time:
1. CARES ACT
On March 27, 2020, the House and Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. There are three big changes that came out of the CARES Act that you should be aware of:
- Cash Gifts Individuals may deduct $300 above-the-line. This charitable deduction enables a taxpayer who is one of the 90% who take the standard deduction to also benefit from his or her charitable gifts. The $300 above-the-line deduction must be gifts of cash by a nonitemizer, and may not be to a donor advised fund or supporting organization.
- 100% Charitable Deduction Limit The usual deduction limit for cash gifts to public charities is 60% of adjusted gross income (AGI). For 2020, gifts of cash to charity (excluding donor advised funds and supporting organizations) are deductible to 100% of AGI. The gift may be for any charitable purpose and is not limited to gifts for Coronavirus relief.
- Required Minimum Distribution (RMD) Waiver The RMD is waived for IRA and other qualified retirement plan owners for the year 2020. This provision will permit IRA and other qualified retirement plan owners to retain funds in their IRAs. Because the markets declined substantially after the current RMD was calculated based on the plan value on December 31, 2019, Congress determined that it was beneficial to waive the RMD for 2020. Loyal donors may still wish to use IRA funds to make a qualified charitable distribution (QCD). The QCD is available up to $100,000 for individuals who are over age 70½.
2. SECURE Act
On December 19, 2019, the Senate passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The SECURE Act includes many provisions designed to facilitate and enhance saving for retirement:
- Traditional IRA Contributions Individuals over age 70½ with earned income may continue to make contributions each year.
- Required Minimum Distribution (RMD) Age For individuals who turn 70½ after December 31, 2019, the RMD age of 70½ is increased to age 72. Many loyal donors may choose to increase their IRA rollover gifts after age 72.
- Retirement Plan Annuities - The rules are generally expanded to permit more qualified retirement plans to offer annuity payout options.
- Stretch Distribution Reduced Inherited IRAs for nonspouse beneficiaries will no longer be distributed over life expectancy, but IRA and other qualified plans of decedents must be paid out over a maximum term of 10 years. There are exceptions for recipients with disabilities, minors and individuals who are within 10 years of the age of the IRA owner.
- IRA Rollover Limit Potentially Reduced - If an individual makes contributions to a traditional IRA after age 70½, the $100,000 per year qualified charitable distribution (QCD) limit is reduced by the amount of IRA contributions after that age. It is probable that most donors either will not have earned income after age 70½, will have total income over the IRA phaseout limits (and may not fund an IRA) or may choose to make Roth IRA contributions.
If you are interested in learning more about any of these ideas, please contact us. Please also let us know how we can help you during this time.