The Coronavirus Aid, Relief, and Economic Security Act (CARES) was a response to the COVID-19 virus. Its primary purpose is to provide financial relief for both businesses and individuals. The CARES Act waives the Required Minimum Distributions (RMD) rules for certain defined contribution plans and IRAs, but for 2020 only.
The result is that, whatever your age, you are not subject to RMD rules this year. You can still take distributions, which will be subject to income taxation, but you are not required to. Additionally, if you are over 70½ years of age, you still can make a qualified charitable distribution from an IRA in 2020, subject to the annual limits. For some donors, this continues to be an effective way to give.
The CARES Act also includes favorable provisions for gifts of cash in 2020.
- A $300 above-the-line deduction is available to those who don’t itemize and therefore would not typically enjoy a tax benefit for their donation.
- An increased limitation on deductions is available to those who itemize (from 60 percent of AGI to 100 percent), which means some donors could find that
- 2020 is a very good year to make a large cash gift.