The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which the President signed into law on March 27th, provides more than $2 trillion in relief touching nearly every corner of the U.S. economy: large and small businesses, health care providers, non-profits, individual citizens, and on and on. Included in its 880 pages are several provisions of particular interest to gift planners and to fundraisers generally. Let’s go through them. I’ll start with the most dramatic change.
After lingering in limbo in the U.S. Senate for months, the “Setting Every Community Up for Retirement Enhancement” Act, aka the SECURE Act, was among several bills attached recently to a “must-pass” appropriations bill that was signed into law on December 20, 2019. The SECURE Act includes many changes to the rules governing retirement plans, including several provisions of particular interest to gift planners. All the rules described below became effective on January 1, 2020.
Why do donors care about the charitable deduction? The charitable deduction is valuable to many donors because it enables them to save taxes. The amount of taxes the donor can save with a given charitable deduction depends on several factors. Let’s consider a simple case first.
On November 22, 2019, the American Council on Gift Annuities (ACGA) announced new suggested maximum gift annuity rates to replace the rates that became effective on July 1, 2018. The new rates will apply to gift annuities established on or after January 1, 2020, although a charity may follow the new rates immediately if it wishes.
For almost 30 years, the IRS has announced each month the interest rate for computing the deduction for gift annuities, charitable remainder trusts, and most other split interest gifts. We call this rate the IRS discount rate. The donor has the option to use the rate for the month of gift or either of the two previous months.