The CARES Act of 2020 (as extended for 2021) and SECURE Act of 2019

In the midst of the new challenges and realities due to COVID-19, Rice continues to advance groundbreaking research while providing transformative educational experiences for students. We appreciate the steadfast support from our Rice community that fuels the essential work we continue to do in this unprecedented time. We have created this page to share new changes in the tax law that you can discuss with your financial, tax or estate planning professional advisor. Additional giving options are also covered.

To learn more, click here to look through our CARES Act of 2020 and SECURE Act of 2019 brochure.

1. CARES ACT

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is an economic stimulus package signed into law on March 27, 2020, and certain provisions were extended for 2021. This law includes several charitable tax provisions to encourage giving during the 2021 tax year with provisions relevant to charitable contributions and charitable strategies for retirement plans.

• The CARES Act (as extended for 2021) includes an above-the-line deduction for charitable donors who do not itemize when filing their tax returns. If you do not itemize but make a cash gift to charity, you will be allowed to take this special tax deduction, up to $300 for individuals, to reduce your tax liability. The extension of the law into 2021 now allows joint filers to claim this tax credit for up to $600. This provision applies only to gifts made to public charities, and does not apply to gifts to donor advised funds nor supporting organizations.
• For those taxpayers who do itemize, the annual cap on the charitable tax deduction for gifts of cash, normally 60% of the taxpayer's adjusted gross income (AGI), has been increased again for 2021 to up to 100% of a taxpayer's AGI. A donor could make a larger gift and conceivably pay no taxes in 2021 as a result of this change in the tax law. There may be planning reasons why a donor might choose not to use the entire deduction in this way, so donors are encouraged to discuss this with their own professional advisors.

2. Donor Advised Funds

If you have a Donor-Advised Fund (DAF) and wish to contribute to Rice's mission, you can make a gift from your DAF to support our work without affecting your personal financial security during this time of economic turmoil. See our guide for more information about charitable gifts from DAFs.

3. Charitable Gift Annuity

There are many benefits to setting up a charitable gift annuity in this uncertain time. Depending on your circumstances and financial goals, you may want to consider setting up a charitable gift annuity with Rice. You can make a gift of your low-performing appreciated stock, CDs or cash and receive guaranteed, lifetime fixed payments. If you use an appreciated asset, like securities, to fund the gift annuity, you will be able to spread the capital gain taxes over your gift annuity payments, taxes that you would otherwise owe in one lump sum had you sold the stock outright instead. You will also receive a charitable tax deduction, and a portion of your payments will be tax-free for a period of time. Learn more about charitable gift annuities here.

Note: On May 8, the American Council on Gift Annuities (ACGA) announced that it will reduce its suggested maximum annuity rates, effective July 1, 2020.

4. IRA Charitable Rollover

An IRA Charitable Rollover gift remains an available giving option for 2021 for certain donors. As long as you are at least 70 ½ years of age, you can make an annual qualified charitable distribution from your IRA of up to $105,000. This distribution will satisfy your required minimum distribution if you have one in 2021. You may also exclude the distribution from income (adjusted for tax-deductible contributions you may have made to your traditional IRA, if any, after age 70 ½). Making a charitable IRA rollover gift to Rice during any tax year enables you to save other tax-favored, non-retirement assets to pass to beneficiaries. Learn more about IRA Rollovers here.

5. SECURE Act

In December of 2019, Congress passed the SECURE Act. The Act has changed the age that retirees are required to take their minimum distributions from 70 ½ to age 72 for those who reach age 70 ½ after December 31, 2019. However, no changes have occurred to the minimum age a donor must be to make a charitable IRA rollover gift, which continues to be age 70 ½. For inherited IRAs, the Act removes the "stretch IRA" provision, which allowed an individual who inherits an IRA to stretch the taxation of their IRA over their lifetimes. Now, those individuals must pay the taxes on their inherited IRA in 10 years. One option to discuss with a professional advisor to effectively restore this tax advantage is to name a testamentary charitable remainder unitrust as the beneficiary of the IRA, and name the IRA recipient as an income beneficiary to the trust. Learn more about the impact of the SECURE Act here.

6. COVID-19 Support

The Rice community is committed to responding to the COVID-19 pandemic by maintaining innovative research, sustaining exceptional learning opportunities for students of all means and continuing to serve our city - and world - in a time of need. If you would like to learn more about ways to support our efforts, visit our Rice Responds webpage.

Gift planning can help you and your professional advisor with your giving, retirement, tax and estate planning goals. Your Rice gift planning team recommends you always consult with your own professional advisor to understand how changes in tax law affect your own personal financial, charitable and tax plans. We are happy to meet with you and your advisor to assist in any way we can. For more information about the CARES Act, SECURE Act or charitable gift planning in support of Rice, please call us at 713-348-4624, or email us at [email protected].